tins 3 sep 2009
TRANSCRIPT
8/9/2019 TINS 3 Sep 2009
http://slidepdf.com/reader/full/tins-3-sep-2009 1/5
BAHANA Beacon – The Spotlight 3 September 2009
Disclosure: Bahana Securities does and seeks to do business with companies covered in its research reports. Investors should consider this report as only a single factor
in making their investment decision.
Please see the important disclaimer information on the back of this report
Significant earnings downgrades
2Q09 performance: Some improvement, but weakness persisted
The performance of Timah (TINS) continued to improve in 2Q09 as average
selling price (ASP) hike 14% q-q outpaced the 7.5% q-q increase in costs.
Margin/ ton expanded from USD176/ton in 1Q09 to USD930/ton in 2Q09
(chart 1). This paved the way for gross and operating margin expansion from
7.9% and 1.2% in 1Q09 to 12.8% and 8.1% respectively in 2Q09. Gross
profit doubled to IDR250b while operating profit grew 757% q-q to IDR160b.
However, forex loss of IDR114b dragged down profit and brought down net
profit to IDR28b. In 1H09, sales were down 16% y-y to IDR3.5t while COGS
jumped 39% y-y to IDR3.16t resulting in gross profit significantly falling 81%
y-y to IDR375b. Lower operating expense could not support operating profit
as it declined 89% y-y to IDR179b, only accounting for 9% of our forecast
and 17% of consensus’. Thus, net profit declined 96% y-y to IDR43b
accounting for 3% of our full-year forecast and 6% of consensus’.
Weaker than expected 1H09 margin per ton
We expect tin price to stay approximately at USD14,500/ton for the
remaining of this year while cost per ton should decline as more high priced
raw material inventories would be used for production, eventually lowering
cost per ton. While this will improve 2H09 performance but we believe our
margin per ton of USD3,900/ ton in 2009 would not be achieved given 1H09
margin per ton of only USD645. Hence, we now lower our full-year 2009
margin per ton to USD2,025/ ton. In 2010, we have also cut our margin per
ton assumption to USD3,600 from USD4,860 previously. Going forward, we
expect some margin support to come from offshore mining which have cost
per ton of around 50% lower than onshore cost. Having said that, TINS has
intensified its offshore mining in 2Q09. Offshore tin-in-concentrate production
reached 70% of 2Q09 total production or 60% of 1H09’s level. As many as
36 units of cutter suction dredgers and 12 bucket line dredgers have been in
operation to support offshore mining. In fact, TINS plans to add 1 bucket well
dredger this year to allow TINS to mine 70 m offshore depth. TINS plans to
maintain at least 50% of offshore mining from future total production.
Cut to HOLD with lower TP of IDR2,200
In 2010, we maintain our tin price assumption of USD18,000/ton as we
expect some economic improvements next year to raise tin prices on stronger
demand. In 2009, we maintain our sales volume estimates but we lower our
tin price assumption to USD13,500/ton (USD12,850/ton ytd), expecting
continued tin price volatility with possible price correction to occur sometime
in 4Q09. Additionally, we expect lower margin per ton estimates in 2009-10,
resulting in a significant 63% and 33% cut in net profit respectively. With
lower WACC of 15.8%, we cut our target price to IDR2,200/ share,
translating to 11% upside potential from current levels. Thus, we downgrade
TINS’ recommendation to HOLD.
Key forecasts and valuations
Year to 31 Dec 2008 2009F 2010F 2011F
Revenue (IDRb) 9,053 7,434 10,201 11,507
EBITDA (IDRb) 2,083 804 1,725 2,221
Net profit (IDRb) 1,342 529 1,241 1,613
EPS (IDR) 267 105 247 320
Growth (%) (24.8) (60.6) 134.6 29.9
PER (x) 7.4 18.8 8.0 6.2
BVPS (IDR) 759 826 974 1,167
PBV (x) 2.6 2.4 2.0 1.7
EV/EBITDA (x) 4.6 11.9 5.5 4.3DPS (IDR) 107 42 99 128
Div. Yield (%) 5.4 2.1 5.0 6.5
ROA (%) 23.2 8.6 17.0 19.0
ROE (%) 35.1 12.7 25.3 27.5
Net gearing (%) 0.8 nc nc nc
Company information Share price (9/2/09) : 1,980
Share outstanding (m) : 5,033
Market cap. (IDRb/USDm) : 9,965/985
3-m avg.daily t.o.(IDRb/USDm) : 116.1/11.5
Bloomberg code : TINS IJ
Shareholders information
Government of Indonesia (%) : 65.0
Free float (%) : 35.0
Share price performance
500
1,000
1,500
2,000
2,500
3,000
9/2/2008 10/24/2008 12/15/2008 2/5/2009 3/29/2009 5/20/2009 7/11/2009 9/1/2009
500
1,000
1,500
2,000
2,500
3,000
TINS IJ Px Last
(IDR) (IDR)
Source : Bloomberg
Relative share price performance
(30.0)
(25.0)
(20.0)
(15.0)
(10.0)
(5.0)
0.0
5.0
10.0
9/2/2008 10/24/2008 12/15/2008 2/5/2009 3/29/2009 5/20/2009 7/11/2009 9/1/2009
(30.0)
(25.0)
(20.0)
(15.0)
(10.0)
(5.0)
0.0
5.0
10.0
JCI (LHS) TINS IJ Rel ati ve t o J CI (RHS)
(%) (%)
Source : Bloomberg
TimahSector: Metal Mining (Neutral)
Achmad SyafrielE-mail: [email protected]
Phone: +6221 250 5081 ext. 3601
HOLD(from BUY)
Price: IDR1,980
TP: IDR2,200 (From IDR3,000)JCI: 2,286
8/9/2019 TINS 3 Sep 2009
http://slidepdf.com/reader/full/tins-3-sep-2009 2/5
BAHANA Beacon – The Spotlight
PT Bahana Securities – Equity Research – Timah 2
PROFIT & LOSS Year to 31 Dec (IDRb) 2008 2009F 2010F 2011F
Total sales 9,053 7,434 10,201 11,507
Cost of goods sold 6,334 6,182 8,018 8,820
Gross profit 2,719 1,251 2,184 2,687
SG&A expenses 648 456 467 475
Operating profit 2,070 795 1,716 2,213Interest expense (40) (44) (43) (43)
Interest income 42 61 71 93
Forex gains (losses) 55 (63) 0 0
Other income (exp) (18) (15) (20) (23)
Earnings bfr taxes 2,109 735 1,724 2,240
Income taxes (767) (206) (483) (627)
Earnings bfr minority 1,342 529 1,241 1,613
Minority interest 0 0 0 0
Net income 1,342 529 1,241 1,613
BALANCE SHEETAs at 31 Dec (IDRb) 2008 2009F 2010F 2011F
Cash & equivalents 461 1,371 1,515 2,285
Accounts receivable 447 282 414 451
Inventories 3,173 2,206 2,977 3,210
Other current assets 224 235 247 259
Total current assets 4,306 4,094 5,152 6,205PP&E - net 880 1,412 1,494 1,576
Other assets 600 629 661 694
Total assets 5,785 6,135 7,307 8,475
Short term borrowings 366 366 366 366
Accounts payable 692 820 1,053 1,164
Current maturities 85 70 96 109
Other current liabilities 498 409 561 633
Total current liabilities 1,641 1,665 2,077 2,272
Long-term maturities 42 34 47 53
Others 282 277 279 278
Minority interest 0 0 0 0
Shareholders’ equity 3,821 4,159 4,904 5,872
Total liabilities & equity 5,785 6,135 7,307 8,475
KEY RATIOSYear to 31 Dec 2008 2009F 2010F 2011F
ROA (%) 23.2 8.6 17.0 19.0
ROE (%) 35.1 12.7 25.3 27.5
Gross margin (%) 30.0 16.8 21.4 23.4
EBITDA margin (%) 23.0 10.8 16.9 19.3
Operating margin (%) 22.9 10.7 16.8 19.2
Pretax margin (%) 23.3 9.9 16.9 19.5
Net margin (%) 14.8 7.1 12.2 14.0
Current ratio (x) 262.4 245.9 248.1 273.2
Quick ratio (x) 69.0 113.4 104.7 131.8
Dividend payout (%) 40.0 40.0 40.0 40.0
Net debt/equity (x) 0.8 nc nc nc
Inter. coverage (x) 51.4 18.3 40.3 51.8
Debt / EBITDA (x) 0.2 0.6 0.3 0.2
CASHFLOW As at 31 Dec (IDRb) 2008 2009F 2010F 2011F
Net profit 1,342 529 1,241 1,613
Depr. & amortization 170 118 118 118
Chg in working capital (1,815) 1,261 (670) (159)
Other-net 52 (100) 141 60
Operating cash flow (250) 1,808 830 1,631
Capital expenditures (576) (650) (200) (200)
Free cash flow (826) 1,158 630 1,431
Acq. & Investments 0 0 0 0
Other - net 70 (35) (29) (34)
Dividends (905) (212) (497) (645)
Total uses of free cash (835) (247) (525) (679)
S-term debt issued 366 0 0 0
Long term debt issued 21 (23) 39 18
Change in cash (1,274) 888 144 770
Beginning cash balance 1,735 483 1,371 1,515
Ending cash balance 461 1,371 1,515 2,285
CAPITAL HISTORY Type of action Term Adj. factor
Oct-95 IPO at IDR2,900 per share - -
Aug-08 Stock split 10 for 1 10
INTERIM
-500
0
500
1,000
1,500
2,000
2,500
3,000
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09
-10%
0%
10%
20%
30%
40%
50%Revenue (IDRb)
Operating profit (IDRb)
Operating margin (RHS)
KEY ASSUMPTIONS Year to 31 Dec 2008 2009F 2010F 2011F
Prices
Tin price (USD/ton) 18,692 13,500 18,000 19,500
Coal price (USD/ton) 41 50 55 60
Sales volume
Tin (tons) 46,438 45,000 48,000 50,000
Coal ('000 tons) 1,789 1,800 1,800 1,800
8/9/2019 TINS 3 Sep 2009
http://slidepdf.com/reader/full/tins-3-sep-2009 3/5
BAHANA Beacon – The Spotlight
PT Bahana Securities – Equity Research – Timah 3
Chart 1. Timah’s margin per ton
3,759
5,212 4,905
6,415
7,8318,739
4,517
-9 176 930
-5,000
0
5,000
10,000
15,000
20,000
25,000
1 Q0 7 2Q 07 3 Q0 7 4 Q07 1 Q0 8 2 Q0 8 3 Q0 8 4 Q0 8 1Q 09 2 Q0 9
Margin/ton
Average tin price/ton
Delivered cost/ton
USD/to
Source: Company, Bahana estimates
Table 1. Timah’s tin metal production and salesTin metal (MT) 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09
Production 11,523 11,469 15,114 10,923 10,462 8,917
Sales 10,176 10,778 13,091 12,393 11,014 13,096
Source: Company
Table 2. Timah’s tin in concentrates productionTin metal (MT) 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09
Onshore 70.8% 74.3% 70.4% 64.4% 51.5% 29.6%
Offshore 29.2% 25.7% 29.6% 35.6% 48.5% 70.4%
Source: Company
Table 3. Forecast revisionsIDRb Old New % changes
2009 2010 2011 2009 2010 2011 2009 2010 2011
Sales 8,667 10,687 12,055 7,434 10,201 11,507 -14.2 -4.5 -4.5
growth (%) -4.3 23.3 12.8 -17.9 37.2 12.8
Gross profit 2,429 2,989 3,596 1,251 2,184 2,687 -48.5 -26.9 -25.3
Gross margin (%) 28.0 28.0 29.8 16.8 21.4 23.4
Operating profit 1,973 2,522 3,121 795 1,716 2,213 -59.7 -31.9 -29.1
Operating margin (%) 22.8 23.6 25.9 10.7 16.8 19.2
Net profit 1,434 1,848 2,309 529 1,241 1,613 -63.1 -32.8 -30.2
Net margin (%) 16.5 17.3 19.2 7.1 12.2 14.0
Source: Bahana estimates
Chart 2. Tin price forecast timeline, 2009F
Source: Bahana estimates
Ma r g i n p e r t o n h a s im p r o v e d
t o U SD 9 3 0 / t o n i n 2 Q0 9 f r o m
U SD 1 7 6 / t o n
2 Q 0 9 sa le s v o lu m e u p 1 9 %
q - q a n d 2 1 .5 % h i g h er y - y
2 Q 0 9 o f f sh o r e p r o d u c t io n
a cc ou n t e d f o r 7 0 % o f t o t a l
Su b s t a n t i a l cu t s i n 2 0 1 0 - 1 1
e a r n i n g s o n h i g h e r c o s t
a s su m p t i o n s
T in p r i c e t o a v e r a g e
U SD 1 3 , 5 0 0 / t o n t h i s y e a rJan Aug Dec
USD13,000/ton
Average : USD13,500/ton
USD14,500/ton
8/9/2019 TINS 3 Sep 2009
http://slidepdf.com/reader/full/tins-3-sep-2009 4/5
BAHANA Beacon – The Spotlight
PT Bahana Securities – Equity Research – Timah
Table 4.TINS’ 6M09 results
q-q y-y %
(IDR b) 2Q08 1Q09 2Q09 (%) (%) 1H08 1H09 chg. 200
Sales 2,391 1,588 1,952 23.0 (18.4) 4,203 3,539 (16) 8,6
COGS 1,324 1,462 1,702 16.4 28.5 2,270 3,164 39 6,2
Gross profit 1,067 125 250 99.5 (76.6) 1,933 375 (81) 2,4
Selling expense 21 16 14 (16.6) (34.1) 38 30 (20)
G&A expense 141 90 76 (15.5) (46.0) 224 166 (26) 3
Operating expenses 162 107 90 (15.6) (44.5) 261 196 (25) 4
Operating profit 905 19 160 756.7 (82.3) 1,672 179 (89) 1,9
Interest income 11 3 5 59.6 (57.0) 28 8 (73)
Interest expense (6) (16) (18) 9.9 178.3 (8) (34) 350 (4
Forex gain (expenses) 19 20 (114) (661.7) (701.6) (32) (94) 192
Other 10 11 35 218.2 252.2 6 46 701 (
Total other income (costs) 33 18 (92) (616.4) (376.7) (6) (74) 1,153
Pretax profit 939 37 68 85.2 (92.8) 1,666 104 (94) 1,9
Taxation 314 22 39 77.8 (87.5) 554 61 (89) 5
Minority interest 0 0 0 na na 0 0 2,525
Net profit 624 14 28 95.2 (95.5) 1,112 43 (96) 1,4
Others
Gross margin (%) 44.6 7.9 12.8 46.0 10.6 2
Operating margin (%) 37.9 1.2 8.2 39.8 5.0 22
Pretax margin (%) 39.3 2.3 3.5 39.6 2.9 23
Net margin (%) 26.1 0.9 1.4 26.5 1.2 1
Source: Company, Bloomberg, Bahana estimates
8/9/2019 TINS 3 Sep 2009
http://slidepdf.com/reader/full/tins-3-sep-2009 5/5
BAHANA Securities
Research (62 21 250 5735/ 250 5081)
Harry Su Head of Research ext [email protected] Strategy, Telecommunications, Consumer, Distribution
Teguh Hartanto Deputy Head of Research ext 3610
[email protected] Banks
Andry Asmoro Economist ext 3605
Achmad Syafriel Analyst ext [email protected] Plantation, Metal Mining
Katherine Hermawan Analyst ext 3603
[email protected] Coal Mining, Property
Pandu Anugrah Analyst ext 3606
[email protected] Toll road, Automotive, Heavy Equipment, Constructions
Alfi Fadhliyah Assistant ext 3607
Hari Septanto Assistant ext 3602
Willinoy Mangaratua Sitorus Assistant ext 3604
Tri Krisnapaskawati Assistant ext 3607
[email protected] Desk (62 21 250 5508/ 527 0808)
Benny Soebagjo Head of Equity ext [email protected]
Afifa Equity Sales ext 2546
Tjokro Wongso Equity Sales ext 2547
Haselinda Rifman Equity Sales ext 2524
John M Dasaad Equity Sales ext 2549
Fixed Income Desk (62 21 250 5490-92)
Natalia Surjadiputra Head of Fixed Income ext [email protected]
Djoko Purwanto Fixed Income Sales ext 2572
Head Office Surabaya Branch
Graha Niaga, 19th Floor Wisma BII, Ground Floor
Jl. Jend. Sudirman Kav. 58 Jl. Pemuda 60-70
Jakarta 12190 Surabaya 60271
Indonesia Indonesia
Tel. 62 21 250 5081 Tel. 62 31 535 2788
Fax. 62 21 522 6049 http://www.bahana.co.id Fax. 62 31 546 1157
DISCLAIMER
The information contained in this report has been taken from sources which we deem reliable. However, none of P.T. Bahana Securities and/or its affiliated companies
and/or their respective employees and/or agents makes any representation or warranty (express or implied) or accepts any responsibility or liability as to, or in relationto, the accuracy or completeness of the information and opinions contained in this report or as to any information contained in this report or any other such information
or opinions remaining unchanged after the issue thereof. We expressly disclaim any responsibility or liability (express or implied) of P.T. Bahana Securities, its affiliated
companies and their respective employees and agents whatsoever and howsoever arising (including, without limitation for any claims, proceedings, action , suits,
losses, expenses, damages or costs) which may be brought against or suffered by any person as a results of acting in reliance upon the whole or any part of the
contents of this report and neither P.T. Bahana Securities, its affiliated companies or their respective employees or agents accepts liability for any errors, omissions or
mis-statements, negligent or otherwise, in the report and any liability in respect of the report or any inaccuracy therein or omission there from which might otherwise
arise is hereby expresses disclaimed. The information contained in this report is not be taken as any recommendation made by P.T. Bahana Securities or any other
person to enter into any agreement with regard to any investment mentioned in this document. This report is prepared for general circulation. It does not have regards
to the specific person who may receive this report. In considering any investments you should make your own independent assessment and seek your own professionalfinancial and legal advice.