Goldman Sachs Asian Coal 18 March 2011

7/27/2019 Goldman Sachs Asian Coal 18 March 2011

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March 18, 2011

ASEAN: Metals & Mining: Coal

Equity Research

Rising costs compound squeeze from lower coal prices; Cautious

Coal prices to correct further on rising supply, weakening demand

Newcastle coal prices have corrected 7% over last 2 months. However, our

checks with traders indicate that demand from China and India continues

to slow in the seaborne market due to high coal prices, while supply out of

Indonesia has been improving recently, consistent with the widening gap

between Indonesias sub-bituminous and Newcastle coal prices. Despite

the shutdown of 12.4GW nuclear plants in Japan, we believe that coal

consumption may slow due to potential demand disruption on shut-down

of 7GW coal power plants (5.5GW may take at least 6 months to re-start of

which 2GW is almost completely damaged), high utilization rates of coalfired plants (75%-85%), port damages and power outages.

Rising costs to keep a lid on margins; remain cautious

Fuel costs (~30% of cash production costs) and inflation pressures are

accelerating with added pressure of higher strip ratios which may lead to

average 12% higher cash costs in 2011E (despite high 2010 base due to one-off

demurrage expenses) and may surprise the market on upside. On higher cost

estimates, we revise our 2011E-13E net profit by -19% to +1% and 12-m

Directors Cut TPs by -21% to +1%. Stocks under our coverage have fallen by

average 7% over the last 2 months, but valuations are still above mid-cycles

(both on EV/EBITDA and EV/GCI), keeping us cautious.

Downgrade Adaro, SAR to Sell; maintain Sell on Bumi (Conv List)

We downgrade Adaro to Sell from Neutral, given our belief that cash

production costs may rise by 20% in 2011E posing earnings risk. We also

downgrade SAR to Sell from Neutral on earnings reduction and our new

2011E-12E earnings forecasts are 31-37% below Bloomberg consensus. We

maintain Conviction Sell on Bumi given its rich valuations, 4th quartile CROCI

profile and earnings risks. Our Sell-ideas offer average downside of about 19%.

Raise ITMG to Buy; PTBA to Neutral post recent underperformance

We upgrade ITMG to Buy from Neutral given attractive valuations (2011E

EV/EBITDA is at 9% discount to sector average), superior CROCI profile (>60%

in 11E-13E) and high dividend yields (6.3% in 2011E). We also upgrade PTBA toNeutral from Sell given the stocks under-performance relative to peers.

Key risks

Disruption in the global coal supply chain causing coal prices to spike.

COAL AND OIL (WTI) PRICE ASSUMPTION

ASEAN COAL SECTOR: VALUATION TABLE

TARGET PRICES AND RATINGS

*This stock is on our regional Conviction List.Note: Our 12-month target prices are based on 2011EDirectors Cut methodology.Source: Bloomberg, Goldman Sachs Research estimates.

Nikhil Bhandari+65-6889-2867 [email protected] Goldman Sachs (Singapore) Pte

The Goldman Sachs Group, Inc. does and seeks to do business withcompanies covered in its research reports. As a result, investors shouldbe aware that the firm may have a conflict of interest that could affectthe objectivity of this report. Investors should consider this report asonly a single factor in making their investment decision. For Reg ACcertification, see the end of the text. Other important disclosures followthe Reg AC certification, or go to www.gs.com/research/hedge.html.Analysts employed by non-US affiliates are not registered/qualified asresearch analysts with FINRA in the U.S.

Patrick Tiah, CFA+65-6889-2468 [email protected] Goldman Sachs (Singapore) PteHong Li Tan+65-6889-2866 [email protected] Goldman Sachs (Singapore) Pte

The Goldman Sachs Group, Inc. Global Investment Research

2009 2010 2011E 2012E

Coal price (NEWC, CY) US$/t 73 98 110 105

YoY growth % % -43% 34% 12% -5%

WTI oil price US$/bbl 62 80 100 110YoY growth % % -38% 29% 25% 10%

Coal as % of oil equiv % 25%* 25% 23% 20%

* 19% based on 5 year long dated oil (CL 60)

Price

Mkt

cap

Liquidity

6-mos

Ticker Curr 16-Mar US$m US$ m 11E 12E 11E 12E

HRUM.JK IDR 9,100 2,728 NA 14.6 11.4 9.4 7.0ADRO.JK IDR 2,375 8,434 12.0 17.1 15.5 7.5 6.7BUMI.JK IDR 3,025 6,473 17.8 15.8 13.6 8.6 8.3ITMG.JK IDR 47,250 5,927 10.0 11.9 10.2 7.9 6.6BANP.BK THB 742 6,239 43.2 12.9 11.6 7.4 6.5PTBA.JK IDR 20,600 5,270 7.4 13.6 12.2 9.0 7.7STRL.SI S$ 2 .49 2 ,045 10 .4 17.4 11.7 10.4 7.4

P/E (X)

EV/EBITDA

(X)

Curr Price Potential

Ticker Old New 16-Mar Old New ups/dwnHRUM.JK Neutral Neutral IDR 9100 8500 8600 -5%

ADRO.JK Neutral Sell IDR 2375 2600 2050 -14%BUMI.JK Sell * Se ll * IDR 3025 2500 2300 -24%

ITMG.JK Neutral Buy IDR 47250 50000 50000 6%BANP.BK Neutral Neutral THB 742 800 725 -2%

PTBA.JK Sell Neutral IDR 20600 19000 18600 -10%

STRL .SI Neut ral Se ll S$ 2. 49 2.30 2 .00 - 20%

12-mo TPGS rating


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March 18, 2011 ASEAN: Metals & Mining: Coal

Goldman Sachs Global Investment Research 2

Table of contents

Coal prices to correct further on easing demand and rising supply 3Coal prices down, but further seaborne demand weakening ahead? 3Japan earthquake: coal consumption may slow near-term 4Supply has been easing recently; coal remain overvalued vs. oil 4Thermal coal supply may continue to improve structurally 6Rising cost inflation; Reduce EPS, TPs; Downgrade Adaro, SAR to Sell; Raise ITMG to Buy,PTBA to Neutral; Remain Sell (CL) on Bumi 8Rising costs may surprise the market on the upside 8PT Adaro (ADRO.JK): Costs may overshoot; downgrade to Sell 15Straits Asia (STRL.SI): Downgrade to Sell; rich valuations, market expectations appear too high 15Bumi Resources (BUMI.JK) Rich valuations, 4th quartile CROCI; maintain Conviction Sell 16ITMG (ITMG.JK) Attractive valuations, high CROCI, strong dividend yield; Upgrade to Buy 17PT Bukit Asam (PTBA.JK) Railway implementation risks largely priced in; upgrade to Neutral from Sell 18Banpu (BANP.BK): Earnings reduction on Daning divestment; maintain Neutral 20Harum (HRUM.JK): Maintain Neutral 20Risks for the sector 20


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Coal prices to correct further on easing demand and rising supply

Coal prices down, but further seaborne demand weakening ahead?

Coal prices have corrected by 7% over last 2 months on easing weather conditions and

weakening demand from China and India. However, our checks with coal traders indicatethat demand from China and India continue to slow in the seaborne market due to high

coal prices.

Exhibit 1: Newcastle spot thermal coal prices(current spot price is US$129/t)

Exhibit 2:Coal and oil (WTI) price assumptionsNo change to our coal price assumptions

Source: Global Coal. Source: Bloomberg, Global Coal, Goldman Sachs Research estimates.

Recently China has been increasingly active in the export market where some of the thermal

coal cargos initially booked for sale to China have been rerouted to international markets like

Japan. We think this could be driven by negative arbitrage between South China and Newcastlecoal prices (which still persists). We estimate that Newcastle coal prices would need to fall

by further 19% to come at parity with Chinas domestic coal prices.

Exhibit 3:South China and Australia coal prices arbitrageremains negative

Exhibit 4:Newcastle coal price parity with Qinhuangdaocoal prices (5,500 kcal, on a landed basis)

Assumptions: US$12/t freight from Australia to China; Rmb50/t domestic

coastal freight; 17% VAT in China.

Source: Global Coal, CCTD, Goldman Sachs Research estimates. Source: Global Coal, CCTD, Goldman Sachs Research estimates.

0

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(US$/t) 2009 2010 2011E 2012ECoal price (NEWC, CY) US$/t 73 98 110 105

YoY growth % % -43% 34% 12% -5%

WTI oil price US$/bbl 62 80 100 110YoY growth % % -38% 29% 25% 10%Coal as % of oil equiv % 25%* 25% 23% 20%

* 19% based on 5 year long dated oil (CL 60)

(70)

(60)

(50)

(40)

(30)

(20)

(10)

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Jan-11

US$/t Qinhuangdao coal prices Break-even Newcastle priceRmb/ton US$/ton

710 96740 100770 104800 108830 113860 117


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Japan earthquake: coal consumption may slow near-term

The emergency shutdown of nuclear power plants in Japan could increase the demand for

coal and other alternative power sources (like LNG/natural gas, oil, hydro), in our view. If all

the nuclear power capacity currently offline were potentially replaced by thermal coal, this

would imply about 36 MT of incremental coal demand (assuming 6,000 kcal GAR energy

value, 35% fuel efficiency, 80% utilization rate based on industry standards). However, if we

assume that each alternative source of power bears approximately 25% nuclear power

disruption in proportion to the current power capacity mix in Japan, we estimate the

impact to thermal coal demand would be about 7 MT.

On the other hand, as per McCloskey (March 16), there are shutdowns of 7 GW of coal-fired

power plants in Japan of which 5.5GW of coal power plants may take at least 6 months

to re-start operations which we estimate implies a potential demand disruption of 15

MT p.a. It is also reported that 2GW (Haramachi plant) of coal fired capacity is almost

completely damaged.

This analysis assumes no decline in total power consumption from power outages or

slower economic activity post the earthquake. McCloskey also reports that Japans coal

fired plants were operating at base-load (approximately 75% to 85% capacity) prior to

the earthquake. According to McCloskey, while there is potential to run plants flat out, this

is only possible for up to one or two months before increasing chances of a critical

breakdown.

While the demand landscape may improve longer-term if nuclear power plants were to re-

commence operations much later compared to thermal coal power plants, we believe such

magnitude of demand improvement would not be enough to absorb the rising supply out

of key exporting nations Indonesia, Australia and South Africa.

Supply has been easing recently; coal remain overvalued vs. oil

Indonesian coal supply has been improving recently, which is consistent with the widening

spread between Indonesias sub-bituminous and Newcastle coal prices. Our recent checkswith coal companies in Indonesia also indicate that monthly mining rates in Jan/Feb have

been very strong compared to 2H2010. Meanwhile shipments out of Newcastle are also

trending upwards (Exhibit 6), mainly driven by recent increase in port capacity by 30%

(with opening of new coal terminal NCIG in 2H2010). As per McCloskey, NCIG

contributed about 7 MT of coal shipments in 2010 (most of it came in 2H of 2010).


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Exhibit 5:Discount between Indonesias sub-bituminouscoal and Newcastle is widening

Exhibit 6:Newcastle coal shipments: +10% yoy in 2010Newcastle quarterly coal shipments (MT)

Source: McCloskey. Goldman Sachs Research. Source: McCloskey.

Coal production growth in Shanxi has shown a strong recovery post consolidation of

mines in this region (2010 production is up 24% yoy). We note that thermal coal inventory

at power stations (IPPs) appear comfortable and are at 16 days in Feb 2011 which

compares with historical range of 11-20 days.

Exhibit 7:Shanxi coal production at historical peaks Exhibit 8:Chinas monthly coal inventories at IPPsInventories remain at comfortable levels (16 days in Feb 11)

Source: SXCoal, CEIC. Source: SXCoal, CEIC, Goldman Sachs Research.

Oil prices have outperformed the Newcastle coal prices by 23% over last 2 months, which

reverses the previous outperformance of coal over oil. Despite this, coal prices are still

overvalued at 24% vs. oil on a heat equivalent basis which compares with historical

average of 22%. Even at a US$110/t oil price assumption, and assuming a historical

average coal-to-oil ratio of 22%, we estimate implied Newcastle coal prices of US$116/t

which is 10% below the current spot coal price of US$129/t.

-40%

-38%

-36%

-34%

-32%

-30%

-28%

-26%

-24%

-22%

-20%

1-J ul-0 9 1-O ct-0 9 1- Ja n- 10 1-A pr-10 1- Ju l-10 1-O ct -10 1- Ja n- 11

Discount narrowed on

weather disruptions inIndonesia (heavy unseasonal

rainfall in 3Q10)

Discount widens as Indocoal supply improves

Average discount = 30%

14

16

18

20

22

24

26

28

1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10

7 MT contributed by new NCIG terminal

0.0

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60.0

70.0

80.0

0

5

10

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25

30

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Days

2005-2010 range 2011


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Exhibit 9:Coal price as % of oil (heat equivalent basis)(Currently 24%, 22% average over 2000-10)

Exhibit 10:Coal price sensitivity to oil on heat equiv basisassuming historical average coal-to-oil ratio of 22%

Note: Our 2011E coal price forecast of US$110/t is based on 23% average coal-

to-oil ratio but ratio is declining in 2012E to 20%.

Source: Bloomberg, Global Coal. Source: Goldman Sachs Research estimates.

Thermal coal supply may continue to improve structurally

We continue to believe that a majority of prior year investments/projects are nearing

completion in Indonesia (34% capacity expansion by year-end 2010E) and we estimate the

capacity utilization to remain low (82% - 84% over 2010-11 vs. 88% in 2008). Some of the

capacity expansion projects which are nearing completion include: (a) a 32 MT conveyor

belt being built by Bumi Resources which is likely to complete by 4Q11; (b) new load out

capacity being built by Straits Asia with a capacity of 5.5 MT (likely commissioning in 1Q11

with a full ramp up by 4Q11).

Further, the first phase (30 mn tons capacity) of the much anticipated third-coal terminal in

Australia (i.e., NCIG, or Newcastle Coal Infrastructure Group) which has been underconstruction since 2008 was completed in May 2010. In the past, coal companies tended to

overstate their Newcastle port access requirements because there was no penalty for non-

fulfillment. As a result, port throughput was not optimal. Under the proposed port access

protocol, coal companies must sign a rolling 10-year ship-or-pay contract and show that

they have the reserves to match. The new access protocol was previously proposed to be

effective 2010; however this has been delayed since then and is now likely to be

implemented in 2011.

Meanwhile, our global thermal coal supply-demand model continues to indicate that

supply deficit in 2010 is likely to narrow in 2011.

Average = 22%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

55%

Jan-00

Jul-00

Jan-01

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Jul-10

Jan-11

Oilprice NewcastlecoalpricesUS$/bbl US$/ton

80 85

90 95

100 106

110 116

120 127


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Exhibit 11:Indonesiacapacity utilization declining Exhibit 12:Newcastles coal terminal capacity (MT)(increased 30% in 2H10 on NCIG coal terminal completion)

Source: Company data, Goldman Sachs Research estimates. Source: NCIG, Goldman Sachs Research estimates.

Exhibit 13:Global thermal coal supply-demand balance(mn tons)

* Estimates of IEA.

Source: IEA, Goldman Sachs Research estimates.

65%

70%

75%

80%

85%

90%

95%

50

100

150

200

250

300

20 03 20 04 20 05 20 06 20 07 20 08 20 09 2010E 2011E

mn tonsProduction (LHS) Capacity (LHS) Utilization rate (RHS)

70

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100

110

120

130

140

150

160

170

2009 2010E 2011E 2012E

2003 2004 2005 2006 2007 2008 2009* 2010E 2011E

Production

PR of China 1,421.7 1,641.9 1,785.9 1,880.4 1,973.7 2,229.6 2,432.6 2,640.3 2,801.4

United States 852.9 888.0 903.3 933.1 920.6 935.7 859.0 859.0 883.9India 331.8 352.4 375.5 398.7 422.6 457.9 487.8 526.8 542.6Indonesia 105.3 131.9 158.6 199.1 231.2 236.7 264.5 290.4 337.9

South Africa 237.5 241.6 243.3 243.2 246.1 250.6 245.7 253.1 263.2Australia 162.8 168.9 171.9 175.7 181.9 185.3 204.6 219.0 236.5Others 633.5 669.8 711.8 741.7 758.9 781.0 777.8 811.1 846.8

Total 3,745.6 4,094.5 4,350.3 4,572.0 4,735.0 5,077.0 5,272.1 5,599.7 5,912.3

Consumption

PR of China 1,427.7 1,661.1 1,816.5 1,965.5 2,073.2 2,295.7 2,640.0 2,852.8 3,063.3India 336.2 372.9 391.7 418.7 454.1 498.8 536.3 597.4 654.2

Japan 108.7 119.9 120.4 121.4 128.8 126.8 112.5 119.6 114.9Other pacific basin 281.4 303.4 326.3 349.9 374.9 388.1 399.0 431.0 448.2

Pacific Basin 2,154.0 2,457.4 2,654.8 2,855.5 3,030.9 3,309.4 3,687.8 4,000.7 4,280.6

Europe (IEA) 290.0 289.9 281.3 294.9 297.6 273.1 248.3 253.9 259.6

United States 879.3 913.2 932.7 920.4 934.6 931.3 842.2 877.6 876.5South Africa 164.4 177.0 172.4 175.1 181.0 179.7 179.4 183.1 187.8Russia 99.8 95.8 96.4 101.1 95.5 106.6 89.8 101.0 105.9

Other Atlantic Basin 204.5 199.8 207.3 217.7 222.6 212.1 203.3 213.5 215.6Atlantic Basin 1,638.0 1,675.6 1,690.2 1,709.2 1,731.3 1,702.8 1,563.0 1,629.0 1,645.4

Total consumption 3,792.0 4,133.0 4,345.1 4,564.7 4,762.2 5,012.1 5,250.8 5,629.7 5,926.0

Net imports(exports) 28.6 24.4 7.9 25.3 30.6 31.4 28.7 - -

Stock changes (17.9) (14.1) 13.1 32.6 3.4 96.3 50.0 (30.0) (13.7)

Production growth (%) 8.9% 9.3% 6.2% 5.1% 3.6% 7.2% 3.8% 6.2% 5.6%Consumption growth (%) 9.6% 9.0% 5.1% 5.1% 4.3% 5.2% 4.8% 7.2% 5.3%

IEA GS estimate


8/29



Rising cost inflation; Reduce EPS, TPs; Downgrade Adaro, SAR toSell; Raise ITMG to Buy, PTBA to Neutral; Remain Sell (CL) on Bumi

Rising costs may surprise the market on the upsideFuel costs (~30% of cash production costs) and inflation pressures are accelerating with

added pressure of higher strip ratios which may lead to average 12% higher cash costs in

2011E (despite high 2010 base due to one off demurrage expenses given high rainfall)

and may surprise the market on upside. While margins are set to rise in 2011E as higher

ASP offsets higher costs, consensus margin expectations appear too high, in our view.

Exhibit 14:Cash production costs break-down Exhibit 15: Key drivers of cash costsBreakdown of cash costs into fuel and non-fuel costs

Source: Goldman Sachs Research estimates. Source: Goldman Sachs Research estimates.

Exhibit 16:Rising cash costs due to higher fuel prices...ASEAN coal stocks cash costs versus oil prices

Exhibit 17:...and inflation...ASEAN coal stocks cash costs versus Indonesia inflation

Source: Bloomberg, Goldman Sachs Research estimates. Source: Goldman Sachs Global ECS Research, Goldman Sachs Research

estimates.

Overburden

removal

45%

Extraction

&

processing

25%

Transportat

ion / others

30%

Fuel cost,

30%

Non-fuel

cost, 70%

Driven by

oil prices

Driven by

inflation,

strip ratios

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2007 2008 2009 2010 2011E

US$/bblUS$/t

Cash production costs Oil price increase yoy

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US$/t

Cash production costs Indonesia's Infation yoy (RHS)


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Exhibit 18:...which may keep a lid on marginsConsensus margin expectations appear too high

Source: Bloomberg, Goldman Sachs Research estimates.

Reducing earnings estimates on higher cost assumptions

We are adjusting our 2011E-13E net profit forecasts by -19% to +1% to factor in higher costs,

mainly driven by higher inflation in Indonesia and higher strip ratios for some companies.

Some company specifics:

Adaro: We are lowering our 2011E-13E net profit forecasts by 18%-19% as we raise thestrip ratio for its Tutupan coal mine (constitutes 91% of total 2011E production) from

5.5X to 6.4X.

SAR: We are lowering the 2011E-13E net profit forecasts by 10%-17% to factor inhigher strip ratio for its Jembayan mine (constitutes 88% of 2011E production) to11.3X

(prior 10.0X).

Banpu: We are lowering the 2011E-13E net profit forecasts by 13-15% to factor in therecent divestment of Daning coal mine in China.

Post the earnings revision, our 2011E-13E net profit forecasts are 2%-37% below

Bloomberg consensus. We are also adjusting 2010E net profit forecasts for Bumi and Adaro

by 6% each as we factor in the higher demurrage expenses due to heavy rainfall in 2H2010.

Exhibit 19:ASEAN coal sector net income revision


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2008 2009 2010 2011E 2012E

US$/t

Bloomberg consensus GS

ASEAN Coal Sector EBITDA/t

Curr FY2010E FY2011E FY2012E FY2013E FY2010E FY2011E FY2012E FY2013E FY2011E FY2012E

Indonesia

Harum Energy Rp bn 861 1528 1952 2026 0% 1% -4% -4% -2% -14%

Bumi Resources US$ mn 275 431 500 502 -6% -10% -9% -6% -18% -26%

PT Adaro Energy Rp bn 2661 4628 5115 4841 -6% -18% -19% -18% -13% -28%

PT Bukit Asam Rp bn NA 3485 4044 4017 NA -5% -7% -8% -3% -4%

ITMG US$ mn NA 497 580 589 NA 0% 0% 0% -7% -8%

Thailand

Banpu Bt mn NA 15684 17325 19449 NA -13% -14% -15% -13% -14%

Singapore

Straits Asia US$ mn NA 114 170 192 NA -16% -17% -10% -31% -37%

vs. consensusGS forecasts % change


10/29



Exhibit 20:ASEAN coal sector: Earnings sensitivity to coal pricesImpact of 5% increase in Newcastle benchmark price

Source: Goldman Sachs Research estimates.

Directors Cut remains our primary valuation methodology

We continue to use our returns-based Directors Cut as our primary methodology to set our

12-month target prices. We identify a high correlation between EV/GCI and CROCI/WACC

for the Indonesian thermal coal sector, as investors tend to reward companies earning

higher returns with a premium ratingi.e., businesses that generate a substantial spread interms of returns (CROCI) over their cost of capital tend to trade at a substantial premium to

the capital invested in that business (GCI).

The Directors Cut methodology considers how the market values the cash invested in a

business (EV/GCI) relative to the returns (value) created by the company from those assets

(CROCI/WACC). This implies that the market expects stocks above the regression line to see

accelerated returns relative to the sector or else are overvalued relative to their cash

returns and as such may represent good potential selling opportunities and vice-versa. The

underlying assumption in the Directors Cut basic framework is that a companys ratio will

converge with the sector average over the long term as under/overvaluations are

arbitraged away.

Adjusting TPs on earnings revisionsWith the earnings revision, we reduce our 12-month target prices by -21% to +1%. There is

no change to our sector average Directors Cut valuation ratio (valratio) of 1.05X which is

used in our target price calculations. For Harum, we apply a valuation ratio of 1.16X (10%

premium) due to its 1st quartile CROCI.

2011E 2012E 2011E 2012E

Adaro +5% +10% +3% +8%

Bumi Resources +8% +21% +5% +15%

Bukit Asam +1% +11% +1% +11%ITMG +5% +13% +4% +12%Banpu +5% +12% +5% +11%

Straits Asia Resources +11% +22% +8% +17%

Harum Energy +3% +12% +3% +11%

Net Profit EBITDA


11/29



Exhibit 21:Coal sector: 2011E Directors Cut plot Exhibit 22:Coal sector: 2012E Directors Cut plot

Source: Goldman Sachs Research estimates. Source: Goldman Sachs Research estimates.

EV/EBITDA, EV/GCI Valuations are above mid-cycles

ASEAN coal stocks have fallen by average 7% over the last 2 months, but valuations are

still above mid-cycle levels. For instance, stocks are trading at nearly 1 SD above mean on

both 12-m forward EV/EBITDA and EV/GCI (Gross Cash Invested).

Exhibit 23:ASEAN coal: 12-mo forward EV/EBITDAtrading at more than 0.5 SD above mean

Exhibit 24:ASEAN coal: 12-mo forward EV/GCItrading at more than 1 SD above mean

Source: DataStream, Company data, Goldman Sachs Research. Source: DataStream, Company data, Goldman Sachs Research.

Adaro - Sell

Bumi - Sell (CL)

PTBA

SAR - Sell

Banpu

ITMG -Buy

Harum

R = 0.9891

0.0

2.0

4.0

6.0

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12.0

14.0

16.0

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9 .0 10 .0 11.0 1 2.0 13.0

EV/GCI(x)

CROCI/WACC (x)

2011E

Adaro -Sell

Bumi -Sell (CL)

PTBA

SAR - Sell

Banpu

ITMG - Buy

Harum

R = 0.981

0.0

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4.0

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14.0

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EV/GCI(x)

CROCI/WACC (x)

2012E

0.00

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4.00

6.00

8.00

10.00

12.00

14.00

16.00

Jan-04

Mar-04

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May-10

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Sep-10

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Mar-11

Sector EV/EBITDA Average +1SD -1SD

ASEAN coal sector - 12 mo fwd EV/EBITDA

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

Jan-04

Apr-04

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Sector EV/GCI ratio Average +1SD -1SD

ASEAN coal sector - 12 mo fwd EV/GCI


12/29



Exhibit 25:Valuation sensitivity to various coal price assumptionsEven at 2011 coal prices of US$130/t valuations are only near mid-cycle levels


Exhibit 26:Target price derivation using Directors CutAssuming stocks converge to average DC ratio


Exhibit 27:ASEAN coal sector CROCI trend

Source: Company data, Goldman Sachs Research estimates.

Share

price Coal price Coal price Coal price Mid-cycle Coal price Coal price Coal price Mid-cycle

Curr 16-Mar = US$110/t = US$120/t = US$130/t P/E = US$110/t = US$120/t = US$130/t EV/EBITDA

Indonesia

PT Harum Energy Rp 9,100 14.1 13.3 12.6 NA 9.2 8.6 8.1 NA

Bumi Resources Rp 3,025 15.8 13.8 12.3 12X 8.6 7.9 7.2 7X

PT Adaro Energy Rp 2,375 16.4 15.1 14.0 13X 7.3 6.8 6.4 6X

PT Bukit Asam Rp 20,600 13.6 13.3 13.0 12X 9.0 8.8 8.5 8X

ITMG Rp 47,250 11.9 11.0 10.1 9X 7.9 7.3 6.8 6X

Banpu Bt 742 12.9 11.8 11.0 12X 7.4 7.0 6.5 NA

Straits Asia S$ 2.49 17.4 14.6 12.6 13X 10.4 9.1 8.1 7X

2011E P/E 2011E EV/EBITDA

Curr Share

price

Rating EV/GCI CROCI/

WACC

Sector

avg DC

Prem/

disc

TP DC

ratio

12-mo TP Upside/

(downside)

16-Mar CY11E CY11E X % X %

Harum Energy Rp 9,100 Neutral 14.1 12.3 1.05 10% 1.16 8,600 -5%

PT Adaro Energy Rp 2,375 Sell 2.2 1.8 1.05 0% 1.05 2,050 -14%

Bumi Resources Rp 3,025 Sell* 1.8 1.4 1.05 0% 1.05 2,300 -24%

PT Bukit Asam Rp 20,600 Neutral 7.9 7.0 1.05 0% 1.05 18,600 -10%

ITMG Rp 47,250 Buy 5.4 5.7 1.05 0% 1.05 50,000 6%

Banpu Bt 742 Neutral 2.0 1.9 1.05 0% 1.05 725 -2%

Straits Asia S$ 2.49 Sell 2.2 1.7 1.05 0% 1.05 2.00 -20%

CROCI 2007 2008 2009 2010E 2011E 2012E

Harum Energy NA 78% 168% 109% 137% 149%

Adaro 23% 19% 26% 18% 20% 20%

Bumi Resources 18% 19% 15% 15% 16% 15%

PTBA 38% 84% 106% 60% 78% 73%

Straits Asia 10% 26% 25% 14% 16% 20%

Banpu 15% 22% 24% 11% 18% 19%

ITMG 29% 55% 64% 52% 66% 62%

CROCI quartiling 2007 2008 2009E 2010E 2011E 2012E

Harum Energy NA 2 1 1 1 1

Adaro 2 4 3 3 3 3

Bumi Resources 3 4 4 3 4 4

PTBA 1 1 2 2 2 2

Straits Asia 4 3 3 4 4 3

Banpu 4 3 4 4 3 4

ITMG 2 2 2 2 2 2


13/29



Target price implied 2011E EV/EBITDA multiples are near mid-cycle

We cross-check our Directors Cut derived 12-month target prices against historical EV/EBITDA

multiples. Given the variability in non-cash items, especially amortization of goodwill and

deferred exploration and development costs, we prefer EV/EBITDA over P/E analysis.

While, in our view, spot coal prices likely bottomed in 2009, we believe earnings will react

with a lag, as Indonesian coal producers largely contract selling prices on a one-yearforward basis. Hence we see 2010 as the trough earnings year, while earnings are likely to

grow significantly in 2011 from rising coal prices. As such, we believe that up-cycle 2010

EV/EBITDA multiples, and near mid-cycle 2011 EV/EBITDA multiples are appropriate.

Exhibit 28:ASEAN coal sector: Ratings and 12-month target price changesAssuming stocks converge to average DC ratio

*denotes stock is on Conviction list.


Shareprice potential

Curr 16-Mar Old New Old New

%

change

upside/

downside

TP

methodology CY11E CY12E Range Avg CY11E CY12E Range Avg

Indonesia

PT Harum Energy Rp 9,100 Neutral Neutral 8,500 8,600 1% -5% Director's Cut 8.9X 6.5X NA NA 13.8X 10.8X NA NA

Bumi Resources Rp 3,025 Sell* Sell* 2,500 2,300 -8% -24% Director's Cut 7.3X 7.0X 3-23X 7X 12.0X 10.4X 2-30X 10X

PT Adaro Energy Rp 2,375 Neutral Sell 2,600 2,050 -21% -14% Director's Cut 6.6X 5.8X 2-8X 6X 14.7X 13.3X 3-18X 14X

PT Bukit Asam Rp 20,600 Sell Neutral 19,000 18,600 -2% -10% Director's Cut 8.0X 6.8X 2-11X 8X 12.3X 11.0X 4-18X 12X

ITMG Rp 47,250 Neutral Buy 50,000 50,000 0% 6% Director's Cut 8.3X 7.0X 1-9X 6X 12.6X 10.8X 2-15X 9X

Thailand

Banpu Bt 742 Neutral Neutral 800 725 -9% -2% Director's Cut 7.3X 6.4X NA NA 12.6X 11.4X 3-16X 12X

Singapore

Straits Asia S$ 2.49 Neutral Sell 2.30 2.00 -13% -20% Director's Cut 8.5X 6.1X 2-15X 8X 14.0X 9.4X 3-26X 14X

12 month target price TP implied 12-mo forward 12-mo forwardTP impliedRating P/EP/EEV/EBITDA EV/EBITDA


14/29

Gol dmanSachsGl obal I nvest ment Research

14

Exhibit 29:Thermal coal sector valuation

Note: Based on calendar-year financials.

*Denotes this stock is on our Asia Pacific Conviction List.

CS = Coverage Suspended. Coverage Suspended stocks are based on Bloomberg estimates.

For important disclosures, please go to http://www.gs.com/research/hedge.html

Source: Bloomberg, Bloomberg estimates, Goldman Sachs Research estimates.

Averagedaily trading

Market volume P/B

GS Price cap (US$ mn) (x) EDOL1 Ticker rating Curr 16-Mar (US$mn) 6-mos 2010E 2011E 2012E 2010E 2011E 2012E 2010E 2011E 2012E 2011E

IndonesiaPT Harum Energy HRUM.JK Neutral IDR 9,100 2,728 NA 7% 76% 27% 25.6 14.6 11.4 16.2 9.4 7.0 7.9 Bumi Resources BUMI.JK Sell * IDR 3,025 6,473 17.8 -15% 49% 16% 23.6 15.8 13.6 11.3 8.6 8.3 2.9

Adaro Energy ADRO.JK Sell IDR 2,375 8,434 12.0 -39% 68% 10% 28.7 17.1 15.5 10.6 7.5 6.7 3.4 Bukit Asam PTBA.JK Neutral IDR 20,600 5,270 7.4 -26% 72% 12% 23.3 13.6 12.2 17.7 9.0 7.7 5.5

PT Indo Tambangraya ITMG.JK Buy IDR 47,250 5,927 10.0 -11% 75% 17% 20.9 11.9 10.2 13.3 7.9 6.6 7.0 ThailandBanpu PCL BANPU.JK Neutral THB 742 6,239 43.2 -3% 36% 10% 17.5 12.9 11.6 15.7 7.4 6.5 2.3 SingaporeStraits Asia Resources STRL.SI Sell S$ 2.49 2,045 10.4 -39% 37% 49% 23.8 17.4 11.7 12.3 10.4 7.4 3.4

ASEAN (AVERAGE) 34,387 -18% 59% 20% 23.3 14.7 12.3 13.9 8.6 7.2 4.6

ChinaYanzhou Coal Mining 1171.HK Buy HKD 24.45 15,151 46.7 104% 41% 25% 11.5 8.0 6.0 8.6 5.9 4.2 2.3

China Shenhua Energy 1088.HK Buy HKD 34.00 85,904 80.4 22% 29% 13% 14.2 10.6 8.8 8.2 5.7 4.6 2.5 China Coal Energy Co 1898.HK Sell HKD 11.48 19,332 45.7 24% 11% 19% 12.8 11.1 8.7 7.4 6.3 4.8 1.6

Australia

BHP Billiton BLT.L CS GBP (p) 2,223 220,959 29,483 41% 26% 4% 11.6 9.2 8.8 7.1 5.7 5.4 2.7 Rio Tinto RIO.L CS GBP (p) 3,882 127,832 34,990 113% 17% -16% 9.6 8.2 9.7 5.5 4.7 5.2 1.8 MacArthur MCC.AX Buy AU$ 10.95 2,526 17.7 51% 40% -12% 11.7 8.3 9.5 5.6 3.9 4.3 1.8

USArch Coal ACI Sell US$ 33.67 5,487 148.7 NM NM NM 34.0 13.4 12.8 10.6 6.4 5.7 2.1

Consol CNX Sell US$ 51.50 11,747 180.9 -23% 7% 18% 22.6 21.1 17.9 10.6 9.4 8.6 3.4 Peabody BTU Buy US$ 65.13 17,468 269.3 67% 79% 17% 21.4 12.0 10.3 10.6 6.9 5.7 2.9

GLOBAL AVERAGE 42% 34% 10% 17.3 11.7 10.5 8.8 6.3 5.6 2.6

Note: Using Adjusted EBITDA for Bumi and Banpu (including associates income)

EPS growth (%) P/E (X) EV/EBITDA (x)


15/29

PT Adaro (ADRO.JK): Costs may overshoot; downgrade to Sell

Costs may overshoot, reduce earnings; downgrade to Sell We estimate a 20%

increase in cash production cost for Adaro in 2011E (highest in ASEAN coal sector) driven

by high fuel prices, rising inflation and higher strip ratio for Tutupan coal mine (6.4X vs.

prior 5.5X). As such, we reduce our earnings estimates for 2011E/12E/13E by 18%/19%/18%

and downgrade the stock to Sell from Neutral. Our 2011E-12E EPS estimates are 13%-28%

below Bloomberg consensus.

Production growth from Tutupan mine may slow Adaros Tutupan coal mine is the

largest single-pit mine in the Southern Hemisphere producing 42 MT in 2010. Going

forward, volume growth from Tutupan may slow due to its huge size and given it is

operating in a single pit. Most of the volume growth will come from Wara coal, which is of

lower energy value and only started production last year. While the % margins from Wara

coal may remain high given lower costs offset lower energy value, $/ton margins may be

relatively lower compared to Tutupan coal.

Coking coal expansion could be a long-term positive, but no visibility/ guidance

During 1Q10, Adaro entered into a JV with BHP to acquire 25% stake in the Maruwai green-

field coking coal project. While this may enhance CROCI in the long-term, however, for the

time being, we believe the project lacks financial disclosures and visibility on infrastructure

developments.

We cut our 12-month 2011E Directors Cut-based target price to Rp2,050 (implying 14%

downside potential) from Rp2,600 on the back of earnings reduction.

Key risks Higher than expected coal or oil prices.

Exhibit 30:Adaros 12-month forward P/E chart Exhibit 31:Adaros 12-mo forward EV/EBITDA chart

Source: Company data, DataStream, Goldman Sachs Research. Source: Company data, DataStream, Goldman Sachs Research.

Straits Asia (STRL.SI): Downgrade to Sell; rich valuations, market

expectations appear too high

Reduce earnings; downgrade to Sell - We reduce our 2011E-13E net profit estimates by

16%-17% on high costs, driven by stronger inflation and higher strip ratio for Jembayan

mine (11.3X vs. prior 10X). With lower earnings, SAR screens as one of themost

expensive stock globally on EV/EBITDA and overvalued versus cash returns. We

downgrade the stock to Sell from Neutral.

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

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2,600

2,8003,000

Aug-08

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4X

8X

12X

16X

20X

Price (Rp)

0

500

1,000

1,500

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2,500

3,000

3,500

Aug-08

Sep-08

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Nov-08

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M

ay-09

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ay-10

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2.0X

3.0X

5.0X

7.0X

9.0X

Price (Rp)


16/29



Market expectations appear too high Our 2011E-2012E net profit estimates are 31%-

37% below Bloomberg consensus driven by lower ASPs (which is in line with company

guidance) and higher costs. Even if we assume a higher ASP of $90 (guidance is $80-85),

our analysis implies consensus downside risk to EBITDA of 7%.

New load-out to commission soon, but ramp up may take time SAR is using

temporary measures to load part of its coal (post collapse of its loader in 2009), which are

more expensive and less efficient. The new loader in Jembayan is expected to commission

soon but the ramp up to full capacity may take time (expected 4Q11). As a result, the costs

in 2011 may continue to remain high as large part of volumes may be supported by

temporary loading facilities.

High production profile may further disappoint While the volumes out-performed in

2010 for Jembayan mine, 2011 may take a breather as the existing loader is running at very

high utilization and may need to undergo some maintenance this year. The higher margin

(i.e. lower cost and higher calorific value) rezoned Sebuku mine may continue to see

production delays as approvals are pending.

We cut our 12-month 2011E Directors Cut-based target price to S$2.00 (implying 20%

downside potential) from S$2.30.

Key risks - higher-than- expected production, sharp coal price rally.

Exhibit 32:SARs EBITDA sensitivity to ASPs (2011E)Even at higher ASP assumptions, earnings risk remains

Exhibit 33:Consensus vs. GS forecasts for 2011E netprofit (US$ mn)

Source: Goldman Sachs Research estimates. Source: Bloomberg, Goldman Sachs Research estimates.

Bumi Resources (BUMI.JK) Rich valuations, 4th quartile CROCI;

maintain Conviction Sell

Valuations are rich - Bumi has out-performed the JCI index and coal peers over last 6months (driven by recent fund raising which eased liquidity risks, London listed Vallar

buying stake in Bumi and listing of non-coal arm BRM). Valuations are rich relative to

CROCI on our Directors Cut framework and on P/E (trading at more than 1 SD above mid-

cycles). We maintain our Sell rating (Conviction List) on the stock.

Low CROCI profile (4th quartile) While Bumis core coal mining assets (KPC and

Arutmin) are still generating strong returns, the most of the companys non-coal

investments (except NNT) are currently not generating returns (some in exploratory stage).

In addition, capital discipline has also been poor with a constant rise in deferred stripping

expenditure (capitalized US$177 mn in 9M2010 now at US$420 mn). Bumi wrote off

US$275 mn of deferred stripping expense in 2009.

Scenario I Scenario II Scenario III Scenario IV CompanyDownside Base Upside Upside guidance

case case case case

ASP US$/t 80.0 83.2 85.0 90.0 80-85

Cash costs* US$/t 52.5 52.5 52.5 52.5 52-53Royalties US$/t 6.2 6.4 6.6 7.0

SG&A US$/t 4.7 4.7 4.7 4.7EBITDA US$/t 16.6 19.6 21.2 25.8

Production MT 11.3 11.3 11.3 11.3 11.0-11.5EBITDA US$m 188 222 240 292vs. consensus % -40% -30% -24% -7%

* excl royalties

100

120

140

160

180

200

220

Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 J an-11 Feb-11 Mar-11

2011 Bloomberg NP consensus

GS 2011E NP historical forecasts

New GS 2011E NP forecasts


17/29



Vallar deal: No change in management control In November 2010, Vallar Plc

announced that it had acquired a 25% stake in Bumi through a share swap deal with the

Bakrie family. Post the transaction, Bumis stock is up 19% vs. the JCI down 4%. We note

that there is no cash offer or change in management control for Bumi.

Market expectations are high - Our 11E-12E EPS is 18%/26% below consensus. This is

mainly because of higher costs and we believe market has not fully priced in the lower

earnings from associate NNT gold and copper mine (30% of 2010E PBT) as the mine cut

back production for expansion and uses a lower grade ore for the next 2 years.

We cut our 12-m Directors Cut-based TP to Rp2,300 (24% downside potential) from

Rp2,500 previously as we reduce our 2010E - 2013E net profit estimates by 9%-10% on

higher cost assumptions.

Key risks - 1) High beta stock may out-perform if coal/oil prices spike sharply, 2) Some ofBumis recent investments (e.g. Oil & Gas, Lead & Zinc) are in exploration stage and wehave not factored in potential earnings contribution, 3) If Bumi refinance CIC loan (19% IRR)

at a lower interest cost, it may boost earnings.

Exhibit 34:Bumi s CROCI profile (4th quartile) Exhibit 35:Bumi s 12-mo forward P/E chart

Source: Goldman Sachs Research estimates. Source: Company data, DataStream, Goldman Sachs Research.

ITMG (ITMG.JK) Attractive valuations, high CROCI, strong

dividend yield; Upgrade to Buy

Attractive valuations; raise to Buy - ITMG has underperformed the JCI market and coal

peers by 7%/8% over last 3 months and the stock is now trading at a 2011E/12E EV/EBITDA

of 7.5X/6.7X which is at low end of the sector (9%/8% discount to ASEAN coal sector

average). The underperformance was largely driven by weaker than expected FY10 results

which we think was largely due to one-offs (hedging loss, higher strip ratio which is likelyto normalize in 2011E). We think the correction is overdone and upgrade the stock to Buy

from Neutral.

High quality coal producer; strong CROCI profile ITMGs average coal calorific value

(CV) is the highest among Indonesian coal producers (5850 kcal vs. sector average of 5500)

which we believe results in superior cash returns (66% in 2011E).

Concerns on short reserves life unjustified in our view We think the market is

concerned about ITMGs reserves life which is at low end of sector at 15 years. However,

we note that reserves to resources ratio is only 20% (peers are 30%-40%) indicating strong

potential to upgrade reserves in future (recently ITMG raised its reserves by 14%).

Meanwhile the concession only lasts 10 years which is lower than the reserves life.

CROCI 2007 2008 2009 2010E 2011E 2012E

Harum Energy NA 78% 168% 109% 137% 149%

Adaro 23% 19% 26% 18% 20% 20%

Bumi Resources 18% 19% 15% 15% 16% 15%

PTBA 38% 84% 106% 60% 78% 73%

Straits Asia 10% 26% 25% 14% 16% 20%

Banpu 7% 15% 16% 11% 18% 19%

ITMG 29% 55% 64% 52% 66% 62%

CROCI quartiling 2007 2008 2009E 2010E 2011E 2012E

Harum Energy NA 2 1 1 1 1

Adaro 2 4 3 3 3 3

Bumi Resources 3 3 4 3 4 4

PTBA 1 1 2 2 2 2

Straits Asia 4 3 3 4 4 3

Banpu 4 4 4 4 3 4

ITMG 2 2 2 2 2 2 0

4

8

12

16

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24

28

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Apr-10

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Jan-11

PE (X)

Average = 9.7X

+1 SD = 14.7X

-1 SD= 4.7X


18/29



High dividend yields ITMGs dividend yield of 6.3% in 2011E is the highest in the ASEAN

coal sector. While there is no fixed dividend policy, we note that dividend payout ratio has

been increasing from 60% in 2007 to 70% in 2009 and 75% in 1H10. ITMG has a net cash

position (US$295 mn in 2010) and generates strong FCF (US$288 mn in 2011E). Given

Banpus (parent company; holds 65% stake in ITMG) high gearing levels (post Centennial

Coal acquisition), we think there could be further upside risk to ITMGs dividend payout

ratio.

We maintain our 12-month 2011E Directors Cut-based target price at Rp50,000, implying

6% upside potential, the highest under our cautious sector stance.

Key risks - Sharp fall in coal or oil prices, a production shortfall.

Exhibit 36:Coal calorific value comparison (kcal, GAR) Exhibit 37:ASEAN coal sector 2011E Dividend yields

Source: Company data, Goldman Sachs Research estimates. Source: Bloomberg, Goldman Sachs Research estimates.

PT Bukit Asam (PTBA.JK) Railway implementation risks largelypriced in; upgrade to Neutral from Sell

Stock has underperformed our coverage universe, upgrade to Neutral from Sell

Since we added PTBA to our Sell List on Oct 22, 2010, the stock has risen by 2.5% (vs. the

JSE down 1.8%) but has underperformed our coverage universe by 3.7% over the same

time period. Over the last 12 months, the stock rose 30.4% (vs. JSE up 32.3%). We thus

raise the stock to Neutral from Sell. We believe the stocks outperformance relative to JCI

index was driven by a 30% rise in spot coal prices over the same time period.

Railway implementation risks remains, but largely priced in PTBAs ongoing railway

project was first initiated in 2007 and after several years of delay is now likely to complete

by end-2014. No land has been acquired as yet and the company needs to acquire at least

50% of the required land (~300 km) before starting its targeted construction in 3Q2011.Recently Adani also announced building of another railway from PTBAs mine which is also

targeting completion in 2014 but the project is only in its feasibility phase. However, given

the stocks recent underperformance, we think this is largely priced in by the market.

We cut our 12-month 2011E Directors Cut-based target price to Rp18,600 (10% downside

potential) from Rp19,000 previously as we reduce our 2011E-2013E net profit estimates by

5%-8% on higher cost assumptions.

Risks Upside: 1) Higher than expected coal prices, 2) Potentially accretive M&A - With

strong net cash position, PTBA has been on a look-out for M&As and bidding for Indo coal

assets, 3) Sooner than expected unlocking of infrastructure bottlenecks. Downside:

Production shortfall.

4800

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5800

6000

Adaro PTBA Bumi SAR Harum ITMG

0%

1%

2%

3%

4%

5%

6%

7%

8%

Adaro Banpu Bumi Harum SAR PTBA ITMG


19/29



Exhibit 38:PTBA 12-mo forward P/E chart Exhibit 39:PTBA 12-mo forward EV/EBITDA chart

Source: Company data, DataStream, Goldman Sachs Research. Source: Company data, DataStream, Goldman Sachs Research.

Exhibit 40:PTBA's share price performance versus peer groupPrices as of 16 March, 2011

Source: Factset, Quantum database.

0

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Price (Rp)

Company Ticker Primary analystPrice

currency

Price as of

03/16/11

Price performance

since 10/22/10

3 month price

performance

6 month price

performance

12 month price

performance

Asia Pacific Metals & Mining Peer GroupPT Tambang Batubara Bukit Asam PTBA.JK Nikhil Bhandari Rp 20,600.00 2.5% 0.7% 9.0% 30.4%

Aluminum Corporation of China (A) 601600.SS Julian Zhu Rmb 11.48 -6.8% 12.1% 17.5% -5.7%

Aluminum Corporation of China (H) 2600.HK Julian Zhu HK$ 7.50 -4.5% 8.2% 12.4% -4.3%

Angang Steel (A) 000898.SZ Julian Zhu Rmb 8.24 -12.0% 2.4% -0.6% -30.8%

Angang Steel (H) 0347.HK Julian Zhu HK$ 10.64 -17.1% -8.3% -17.5% -25.8%

Anhui Conch Cement (A) 600585.SS Julian Zhu Rmb 35.97 36.8% 20.7% 64.3% 76.4%

Anhui Conch Cement (H) 0914.HK Julian Zhu HK$ 41.50 23.0% 15.8% 26.9% 70.6%

Banpu Public Company BANP.BK Nikhil Bhandari Bt 742.00 -5.1% -7.5% 15.6% 22.0%

Baoshan Iron & Steel 600019.SS Julian Zhu Rmb 7.45 3.0% 12.7% 14.8% -9.0%BBMG Corporation 2009.HK Rowena Chang HK$ 11.24 -8.5% 6.0% 7.0% 47.3%

Bhushan Steel BSSL.BO Pritesh Vinay Rs 447.35 -16.0% -0.7% 13.0% 30.3%

Bumi Resources BUMI.JK Nikhil Bhandari Rp 3,025.00 28.7% 7.1% 66.2% 21.0%

China Molybdenum Co. 3993.HK Julian Zhu HK$ 6.65 10.8% -0.4% 30.6% 8.0%

China National Building Material 3323.HK Julian Zhu HK$ 23.65 18.8% 32.3% 43.0% 67.3%

China Steel (GDR) 2002q.L Rowena Chang $ 23.30 16.2% 8.2% 15.0% 17.1%

China Steel Corporation 2002.TW Rowena Chang NT$ 34.40 11.3% 7.0% 7.3% 8.0%

Dongkuk Steel Mill 001230.KS Rajeev Das W 34,000.00 25.7% 8.8% 34.7% 47.8%

Hindalco Industries HALC.BO Pritesh Vinay Rs 203.10 -4.2% -9.3% 9.1% 19.8%

Hindustan Zinc HZNC.BO Pritesh Vinay Rs 130.85 6.1% 7.3% 22.7% 3.4%

Hyundai Steel 004020.KS Rajeev Das W 133,000.00 19.3% 14.7% 19.3% 50.6%

Jiangxi Copper (A) 600362.SS Julian Zhu Rmb 40.24 -9.2% 1.0% 28.4% 18.2%

Jiangxi Copper (H) 0358.HK Julian Zhu HK$ 23.50 6.8% -1.5% 31.3% 42.3%

Jindal Steel & Power JNSP.BO Pritesh Vinay Rs 664.10 -5.8% -1.0% -5.0% -4.4%

JSW Steel JSTL.BO Pritesh Vinay Rs 905.25 -27.8% -22.3% -24.4% -24.5%

Korea Zinc 010130.KS Seung Shin W 361,000.00 23.2% 18.9% 32.5% 87.5%

Maanshan Iron & Steel (A) 600808.SS Julian Zhu Rmb 3.86 0.8% 9.3% 9.3% -9.0%

Maanshan Iron & Steel (H) 0323.HK Julian Zhu HK$ 4.18 -10.1% 2.2% -9.5% -9.7%

National Aluminium Company NALU.BO Pritesh Vinay Rs 107.65 7.4% 15.7% 5.9% 8.4%

POSCO 005490.KS Rajeev Das W 482,000.00 -1.1% 2.6% -5.9% -11.6%POSCO (ADR) PKX Rajeev Das $ 106.42 -1.2% 4.1% -6.0% -12.4%

PT Adaro Energy Tbk ADRO.JK Nikhil Bhandari Rp 2,375.00 5.6% -5.9% 13.1% 27.0%

PT Indo Tambangraya Megah ITMG.JK Nikhil Bhandari Rp 47,250.00 -4.5% -5.1% 22.4% 38.4%

Sesa Goa SESA.BO Pritesh Vinay Rs 263.25 -23.2% -10.6% -18.2% -40.1%

Steel Authority of India SAIL.BO Pritesh Vinay Rs 156.85 -28.4% -16.6% -22.3% -33.6%

Sterlite Industries (India) STRL.BO Pritesh Vinay Rs 159.45 -5.2% -7.4% -6.0% -23.3%

Straits Asia Resources STRL.SI Nikhil Bhandari S$ 2.49 9.2% 1.6% 9.7% 19.7%

Tangshan Jidong Cement Co 000401.SZ Rowena Chang Rmb 24.71 3.6% 4.8% 23.1% 55.5%

Tata Steel TISC.BO Pritesh Vinay Rs 599.45 -2.9% -9.0% 0.7% -4.4%

Wuhan Iron and Steel 600005.SS Julian Zhu Rmb 5.05 -1.0% 11.5% 10.7% -23.5%

Jakarta SE Composite Index 3,531 -1.8% -1.1% 5.7% 32.3%


20/29



Banpu (BANP.BK): Earnings reduction on Daning divestment;

maintain Neutral

Banpu recently announced the divestment of its 56% owned Daning mine in China for a

consideration of US$669 mn. According to the company announcement, the rationale of

this divestment is in keeping with the Chinese governments policy regarding preferred

investment ownership interests in Chinese coal mining companies. As a result, we reduceour 2011E-13E earnings forecasts by 13%-15%. Given the suspension of license for Daning

late last year, we think the announcement alleviates market concerns about production

from this mine. We maintain our Neutral rating on the stock.

In addition to Daning, Banpu also owns stake in Hebi (17%) and Gaohe (45%) mines in

China. While we note that Banpu do not own the majority stake in these mines, if Banpu

were to sell these assets, there could be potential earnings downside impact of up to 15%

in 2011-13 (based on earnings contribution from these mines).

We reduce our 12-month Directors Cut-based target price to Bt725 (2% downside potential)

from Bt800 on earnings reduction.

Risks Upside risks: Sharp rise in coal prices; Downside risks: A production shortfall or a

sharp fall in coal or oil prices.

Harum (HRUM.JK): Maintain Neutral

We raise our 12-month Directors Cut-based target price to Rp8,600 (5% downside

potential) from Rp8,500 as higher costs in 2011E is more than offset by higher ASPs as

company locked in the ASPs when coal prices were very high.

Given that there is limited upside/downside potential to our new target price, we maintain

our Neutral ratings on the stocks.

Risks Upside risks: Sharp rise in coal prices; Downside risks: A production shortfall or a

sharp fall in coal or oil prices.

Risks for the sector

Higher-than-expected oil prices: Coal prices and coal equities are both highly correlated

to oil prices. We are positive on the oil price cycle, although we believe coal prices may

relatively underperform oil prices.

Coal prices may spike if there is a disruption in supplies: Coal demand is largely driven

by electricity generation and tends to be relatively consistent. However, if there are

unexpected supply disruptions (e.g., if heavy rains disrupt mining activities or if there is a

logistics breakdown in the supply chain), then power producers may need to cover their

requirements in the spot market. Given that a large part of the coal market is contracted on

a one-year forward basis, spot volumes are relatively small and illiquid and hence an

unexpected increase in spot demand could have a disproportionate impact on spot prices,

causing them to spike.

China demand being stronger than expected: China is the strongest demand driver for

thermal coal, with about 46% of world demand.


21/29



Exhibit 41:ASEAN coal sector: Operational comparison

Source: Company data, Goldman Sachs Research estimates

Adaro ITMG Bukit Asam Bumi Straits Asia Harum

Production profile

2007 mn tons 36.0 17.9 9.3 54.2 3.4 2.8

2008 mn tons 38.5 17.6 10.8 53.2 8.6 3.0

2009 mn tons 40.6 21.4 11.5 63.1 8.4 5.2

2010E mn tons 43.0 22.0 12.5 60.0 10.6 6.0

2011E mn tons 47.0 25.2 15.2 67.0 11.3 8.82012E mn tons 53.0 28.0 17.4 76.0 14.0 12.5

YoY growth

2007 % 5% -9% 0% 7% -3% N.A.

2008 % 7% -2% 16% -2% 154% 8%

2009 % 5% 22% 7% 19% -2% 72%

2010E % 6% 3% 8% -5% 25% 17%

2011E % 9% 15% 22% 12% 7% 46%2012E % 13% 11% 14% 13% 24% 43%

2 year CAGR 2007-2009 % 6% 9% 12% 8% 58% 36%

3 year CAGR 2009-2012E % 9% 9% 15% 6% 18% 34%

Group ASP

2007 US$/ton 32.8 44.3 46.0 44.0 45.1 36.1

2008 US$/ton 43.2 73.5 60.3 73.5 73.5 65.1

2009 US$/ton 58.9 73.5 72.7 60.6 86.1 72.4

2010E US$/ton 56.9 75.0 69.5 71.4 73.3 75.2

2011E US$/ton 71.4 85.8 82.7 81.5 83.2 86.3

2012E US$/ton 70.7 91.0 85.8 81.6 84.3 83.5

Cash Production cost (inc royalty)

2007 US$/ton 24.2 30.9 27.9 29.3 29.0 28.72008 US$/ton 29.3 44.7 30.6 42.6 44.0 44.3

2009 US$/ton 32.0 42.7 31.2 37.3 46.4 40.3

2010E US$/ton 35.2 48.6 35.0 43.3 52.6 41.6

2011E US$/ton 42.4 50.9 37.7 48.9 59.0 45.2

2012E US$/ton 42.7 54.2 39.7 50.9 58.0 46.5

Strip ratio

2007 x 4.3 9.2 3.5 8.5 5.4 10.1

2008 x 4.3 11.7 3.5 8.5 7.3 12.5

2009 x 5.0 12.9 3.5 8.5 9.8 13.1

2010E x 5.4 13.0 3.5 9.1 9.7 11.4

2011E x 6.0 12.2 3.5 9.1 10.6 10.4

2012E x 5.7 12.2 3.5 9.1 9.7 10.1

Based on 2009

Fuel cost as % of total costs % 16% 35% 20% 30% 40% 35%

Average royalty rate (%) % 11% 13% 5% 11% 9% 11%

Reserve life years 22 15 172 45 14 24

Coal characteristicsAvg calorific value (2009) kCal 5100 5871 5246 5604 5617 5750

Sulphur (%) % 0.1% 0.7% 0.8% 0.8% 0.7%


22/29



Exhibit 42:Bumi Resources --- summary financialsProfit model ($ mn) 12/09 12/10E 12/11E 12/12E Balance sheet ($ mn) 12/09 12/10E 12/11E 12/12E

Total revenue 3,219.3 3,878.8 4,925.2 5,588.4 Cash & equivalents 60.1 571.7 91.0 164.2

Cost of goods sold (1,840.6) (2,217.1) (2,771.1) (3,293.2) Accounts receivable 754.0 865.7 737.3 582.8

SG&A (457.5) (536.8) (658.7) (760.1) Inventory 199.4 182.2 227.8 270.7

R&D 0.0 0.0 0.0 0.0 Other current assets 1,038.2 1,038.2 1,038.2 1,038.2Other operat ing profit/(expense) (10.8) (40.5) (40.9) (43.5) Total current assets 2,051.6 2,657.8 2,094.4 2,055.9

EBITDA 1,075.7 1,289.9 1,662.2 1,713.1 Net PP&E 1,472.5 1,625.2 1,775.6 1,914.1

Depreciation & amortization (165.3) (205.4) (207.8) (221.5) Net intangibles 365.9 340.9 316.0 291.0

EBIT 910.4 1,084.5 1,454.4 1,491.6 Total investments 950.6 1,450.0 1,666.3 1,937.4

Interest income 2.9 30.3 49.4 39.4 Other long-term assets 2,570.3 2,475.6 2,689.9 2,918.6

Interest expense (180.9) (601.8) (553.3) (506.2) Total assets 7,410.9 8,549.6 8,542.1 9,117.0

Income/(loss) from uncons. subs. 83.0 270.0 216.3 271.1

Others (62.4) 0.0 0.0 0.0 Accounts payable 1,083.7 957.0 1,017.7 1,074.9

Pretax profits 752.9 783.0 1,166.9 1,295.9 Short-term debt 421.6 640.0 223.9 795.4

Income tax (340.4) (327.6) (503.5) (556.0) Other current liabilities 610.0 516.9 516.9 516.9

Minorities (93.2) (180.6) (232.7) (239.8) Total current liabilities 2,115.3 2,113.8 1,758.5 2,387.2

Long-term debt 3,069.6 3,624.0 3,451.5 2,807.7

Net income pre- pref erred dividend s 319.4 274.8 430.7 500.0 Other long-term liabilities 629.4 440.7 440.7 440.7

Preferred dividends 0.0 0.0 0.0 0.0 Total long-term liabilities 3,699.0 4,064.7 3,892.2 3,248.4

Net income (pre-exceptionals) 319.4 274.8 430.7 500.0 Total liabilities 5,814.3 6,178.6 5,650.6 5,635.6

Post-tax exceptionals (128.9) 42.1 0.0 0.0

Net income 190.4 316.9 430.7 500.0 Preferred shares 0.0 0.0 0.0 0.0

Total common equity 1,471.0 2,064.7 2,352.5 2,702.6

EPS (basic, pre-except) ($) 0.02 0.01 0.02 0.02 Minority interest 125.7 306.3 539.0 778.8

EPS (basic, post-except) ($) 0.01 0.02 0.02 0.02

EPS (diluted, post-except) ($) 0.01 0.02 0.02 0.02 Total liabilities & equity 7,410.9 8,549.6 8,542.1 9,117.0

DPS ($) 0.01 0.00 0.01 0.01

Dividend payout ratio (%) 50.3 26.2 30.0 30.0 BVPS ($) 0.08 0.11 0.12 0.13

Free cash flow yield (%) (11.8) (4.8) 5.3 6.5

Growth & margins (%) 12/09 12/10E 12/11E 12/12E Ratios 12/09 12/10E 12/11E 12/12E

Sales growth (4.7) 20.5 27.0 13.5 ROE (%) 12.5 17.9 19.5 19.8

EBITDA growth (11.5) 19.9 28.9 3.1 ROA (%) 3.0 4.0 5.0 5.7

EBIT growth (17.8) 19.1 34.1 2.6 ROACE (%) 12.3 14.2 15.2 15.0

Net income growth (70.5) 66.4 35.9 16.1 Inventory days 34.9 31.4 27.0 27.6

EPS growth (70.1) 63.4 29.0 16.1 Receivables days 69.3 76.2 59.4 43.1

Gross margin 42.8 42.8 43.7 41.1 Payable days 194.7 168.0 130.1 116.0

EBITDA margin 33.4 33.3 33.7 30.7 Net debt/equity (%) 233.3 178.8 152.4 127.2

EBIT margin 28.3 28.0 29.5 26.7 Interest cover - EBIT (X) 5.1 1.9 2.9 3.2

Valuation 12/09 12/10E 12/11E 12/12E

Cash flow statement ($ mn) 12/09 12/10E 12/11E 12/12E

Net income pre-preferred dividends 319.4 274.8 430.7 500.0 P/E (analyst) (X) 20.8 24.0 16.2 14.0

D&A add-back 165.3 205.4 207.8 221.5 P/B (X) 4.4 3.2 3.0 2.6

Minorities interests add-back 93.2 180.6 232.7 239.8 EV/EBITDA (X) 9.4 11.4 9.1 8.7

Net (inc)/dec working capital (542.0) (221.2) 143.5 168.9 Dividend yield (%) 1.5 1.3 1.8 2.1

Other operating cash flow (49.8) (110.0) (66.1) (119.5)

Cash flow from operations 92.5 299.3 948.6 1,010.7

Capital expenditures (423.0) (288.2) (288.2) (290.0)

Acquisitions (11.0) (229.4) 0.0 0.0

Divestitures 0.0 0.0 0.0 0.0

Others (1,640.7) 122.1 (259.3) (273.6)

Cash flow fro m in vestments (2,074.7) (395.5) (547.5) (563.6)

Dividends paid (common & pref) (95.8) (83.1) (129.2) (150.0)

Inc/(dec) in debt 2,191.9 330.9 (738.9) (223.9)

Common stock issuance (repurchase) 210.9 360.0 (13.7) 0.0

Other financing cash flows (436.7) 0.0 0.0 0.0

Cash flow from financing 1,870.2 607.8 (881.8) (373.9)

Total cash flow (111.9) 511.6 (480.7) 73.2 Note: Last actual year may include reported and estimated data.



23/29



Exhibit 43:Adaro --- summary financialsProfit model (Rp bn) 12/09 12/10E 12/11E 12/12E Balance sheet (Rp bn) 12/09 12/10E 12/11E 12/12E

Total revenue 26,938.0 24,495.5 32,685.9 36,148.9 Cash & equivalents 11,274.6 6,033.0 3,266.4 4,169.9

Cost of goods sold (15,900.1) (16,867.3) (21,519.7) (24,295.2) Accounts receivable 2,903.6 3,020.0 4,029.8 4,456.7

SG&A (1,109.5) (953.2) (1,114.3) (1,183.4) Inventory 250.5 372.0 474.3 530.3

R&D 0.0 0.0 0.0 0.0 Other current assets 1,408.2 1,650.0 1,650.0 1,650.0Other operating profit/(expense) 0.0 0.0 0.0 0.0 Total current assets 15,836.9 11,075.0 9,420.4 10,806.9

EBITDA 11,198.1 8,027.4 11,669.4 12,622.9 Net PP&E 17,207.3 19,005.1 23,477.6 25,005.1

Depreciation & amortization (1,269.6) (1,352.2) (1,617.5) (1,952.5) Net intangibles 9,091.8 8,578.0 8,070.9 7,563.8

EBIT 9,928.4 6,675.1 10,051.8 10,670.4 Total investments 4.8 3,019.8 3,019.8 3,019.8

Interest income 68.2 218.9 117.1 63.4 Other long-term assets 324.7 337.2 349.7 362.2

Interest expense (915.8) (1,121.6) (1,005.6) (832.8) Total assets 42,465.4 42,015.1 44,338.3 46,757.7


Others (633.4) (507.1) (507.1) (507.1) Accounts payable 5,158.2 4,621.2 5,895.8 6,656.2

Pretax profits 8,447.4 5,265.2 8,656.2 9,393.9 Short-term debt 2,507.0 2,752.7 2,752.7 2,752.7

Income tax (4,056.2) (2,580.0) (3,981.9) (4,227.3) Other current liabilities 330.8 330.8 330.8 330.8

Minorities (48.6) (24.1) (46.7) (51.7) Total current liabilities 7,996.0 7,704.7 8,979.3 9,739.7

Long-term debt 13,516.5 11,613.5 9,144.6 6,915.8

Net income pre-prefer red d ividends 4,342.7 2 ,661.2 4 ,627.6 5 ,115.0 Other long-term liabilities 3,441.0 3,441.0 3,441.0 3,441.0


Net income (pre-exceptionals) 4,342.7 2,661.2 4,627.6 5,115.0 Total liabilities 24,953.5 22,759.2 21,564.9 20,096.5

Post-tax exceptionals 68.1 (276.0) 0.0 0.0

Net income 4,410.7 2,385.2 4,627.6 5,115.0 Preferred shares 0.0 0.0 0.0 0.0

Total common equity 17,444.9 19,164.8 22,635.5 26,471.7EPS (basic, pre-except) (Rp) 136 83 145 160 Minority interest 67.0 91.1 137.9 189.5

EPS (basic, post-except) (Rp) 138 75 145 160

EPS (diluted, post-except) (Rp) 138 75 145 160 To ta l li abi liti es & equ ity 42, 465.4 42,015. 1 44,338 .3 46,757 .7

DPS (Rp) 61 21 36 40

Dividend payout ratio (%) 44.6 27.9 25.0 25.0 BVPS (Rp) 545 599 708 828

Free cash flow yield (%) 10.9 (0.1) 0.5 5.4


Sales growth 48.9 (9.1) 33.4 10.6 ROE (%) 28.0 13.0 22.1 20.8

EBITDA growth 116.5 (28.3) 45.4 8.2 ROA (%) 11.6 5.6 10.7 11.2

EBIT growth 135.7 (32.8) 50.6 6.2 ROACE (%) 22.0 12.6 17.5 17.6

Net income growth 218.2 (45.9) 94.0 10.5 Inventory days 6.4 6.7 7.2 7.5

EPS growth 153.3 (45.9) 94.0 10.5 Receivables days 35.6 44.1 39.4 42.8




Valuation 12/09 12/10E 12/11E 12/12ECash flow statement (Rp bn) 12/09 12/10E 12/11E 12/12E

Net income pre-preferred dividends 4,342.7 2,661.2 4,627.6 5,115.0 P/E (analyst) (X) 17.1 27.9 16.1 14.5

D&A add-back 1,269.6 1,352.2 1,617.5 1,952.5 P/B (X) 4.3 3.9 3.3 2.8


Net (inc)/dec working capital 630.5 (1,016.8) 162.7 277.4 Dividend yield (%) 2.6 0.9 1.6 1.7

Other operating cash flow 507.1 507.1 507.1 507.1

Cash flow from operations 6,735.6 3,527.8 6,961.7 7,903.7

Capital expenditures (2,095.1) (3,150.0) (6,090.0) (3,480.0)

Acquisitions (446.8) (3,020.9) (12.5) (12.5)


Others 131.0 (276.0) 0.0 0.0

Cash f low from investments (2,411.0) (6,446.9) (6,102.5) (3,492.5)

Dividends paid (common & pref) (1,965.3) (665.3) (1,156.9) (1,278.7)

Inc/(dec) in debt 4,775.8 (1,657.3) (2,468.9) (2,228.9)

Common stock issuance (repurchase) 990.2 0.0 0.0 0.0


Cas h flow from financing 3,438.1 (2,322.6) (3,625.8) ( 3,507.6)

Total cash flow 7,762.7 ( 5,241.7) ( 2,766.6) 903.5 Note: Last actual year may include reported and estimated data.



24/29



Exhibit 44:Straits Asia (SAR) --- summary financialsProfit model ($ mn) 12/10 12/11E 12/12E 12/13E Balance sheet ($ mn) 12/10 12/11E 12/12E 12/13E

Total revenue 736.5 867.7 1,097.5 1,226.7 Cash & equivalents 80.7 61.7 85.3 135.0

Cost of goods sold (555.6) (636.4) (773.3) (866.1) Accounts receivable 113.4 142.6 180.4 201.7

SG&A (36.5) (55.7) (65.1) (70.4) Inventory 21.3 47.5 60.1 67.2

R&D 0.0 0.0 0.0 0.0 Other current assets 43.6 43.6 43.6 43.6

Other operating profit/(expense) 3.2 3.2 3.2 3.2 Total current assets 259.1 295.5 369.5 447.5EBITDA 185.9 221.5 306.6 340.3 Net PP&E 734.7 786.6 836.6 881.6


EBIT 147.6 178.8 262.2 293.4 Total investments 0.0 0.0 0.0 0.0


Interest expense (12.8) (16.9) (20.4) (20.4) Total assets 1,098.0 1,169.9 1,293.2 1,415.6


Others (13.0) 0.0 0.0 0.0 Accounts payable 160.0 174.3 211.9 237.3

Pretax profits 122.4 162.5 242.4 273.7 Short-term debt 0.0 0.0 0.0 0.0


Minorities 0.0 0.0 0.0 0.0 Total current liabilities 167.9 182.2 219.7 245.2

Long-term debt 313.2 313.2 313.2 313.2

Net income pre-preferred dividends 85.9 113.8 169.7 191.6 Other long-term liabilities 93.1 93.1 93.1 93.1

Preferred dividends 0.0 0.0 0.0 0.0 Total long-term liabilities 406.3 406.3 406.3 406.3

Net income (pre-exceptionals) 85.9 113.8 169.7 191.6 Total liabilities 574.2 588.5 626.0 651.5

Post-tax exceptionals 2.3 0.0 0.0 0.0


Total common equity 523.8 581.3 667.2 764.2


EPS (basic, post-except) ($) 0.08 0.10 0.16 0.18EPS (diluted, post-except) ($) 0.08 0.10 0.16 0.18 Total liabilities & equity 1,098.0 1,169.9 1,293.2 1,415.6

DPS ($) 0.04 0.05 0.08 0.09

Dividend payout ratio (%) 49.4 49.4 49.4 49.4 BVPS ($) 0.46 0.53 0.61 0.70

Free cash flow yield (%) 0.9 0.5 4.7 6.6


Sales growth (1.6) 17.8 26.5 11.8 ROE (%) 17.7 20.6 27.2 26.8








Valuation 12/10 12/11E 12/12E 12/13E



D&A add-back 38.3 42.7 44.3 46.8 P/B (X) 3.9 3.4 3.0 2.6


Net (inc)/dec working capital (26.6) (41.1) (12.8) (2.9) Dividend yield (%) 2.1 2.8 4.2 4.8


Cash flow from operations 96.6 115.4 201.1 235.5


Acquisitions (13.1) 0.0 0.0 0.0


Others 0.2 16.4 0.6 0.6

Cash flow from investments (83.8) (78.2) (93.7) (91.2)

Dividends paid (c ommon & pref) (43.6) (56.2) (83.8) (94.7)

Inc/(dec) in debt 106.7 0.0 0.0 0.0

Common stock issuance (repurchase) 7.0 0.0 0.0 0.0


Cash flow from financing 11.1 (56.2) (83.8) (94.7)

Total cash flow 24.0 (19.0) 23.6 49.7 Note: Last actual year may include reported and estimated data.



25/29



Exhibit 45:ITMG --- summary financialsProfit model ($ mn) 12/10 12/11E 12/12E 12/13E Balance sheet ($ mn) 12/10 12/11E 12/12E 12/13E

Total revenue 1,668.2 2,162.6 2,548.0 2,645.6 Cash & equivalents 294.6 189.4 275.5 405.0

Cost of goods sold (1,126.6) (1,316.2) (1,556.6) (1,652.2) Accounts receivable 151.4 266.6 314.1 326.2

SG&A (178.7) (190.1) (224.0) (216.9) Inventory 70.5 79.3 93.8 99.6

R&D -- -- -- -- Other current assets 91.6 91.6 91.6 91.6

Other operating profit/(expense) 0.0 0.0 0.0 0.0 Total current assets 608.2 626.9 775.1 922.4

EBITDA 423.9 729.8 853.4 874.7 Net PP&E 348.3 415.6 461.7 497.0


EBIT 362.9 656.3 767.4 776.6 Total investments 0.0 0.0 0.0 0.0


Interest expense (3.2) 0.0 0.0 0.0 Total assets 1,089.7 1,196.2 1,388.7 1,537.5


Others (7.7) 0.0 0.0 0.0 Accounts payable 94.8 104.6 123.7 131.3

Pretax profits 357.4 662.2 773.1 784.8 Short-term debt 0.0 0.0 0.0 0.0


Minorities 0.0 0.0 0.0 0.0 Total current liabilities 331.5 313.8 361.4 363.1

Long-term debt 0.0 0.0 0.0 0.0

Net income pre-preferred dividends 263.1 496.7 579.8 588.6 Other long-term liabilities 37.2 37.2 37.2 37.2

Preferred dividends 0.0 0.0 0.0 0.0 Total long-term liabilities 37.2 37.2 37.2 37.2

Net income (pre-exceptionals) 263.1 496.7 579.8 588.6 Total liabilities 368.7 351.0 398.6 400.2



Total common equity 721.0 845.2 990.1 1,137.3


EPS (basic, post-except) ($) 0.16 0.44 0.51 0.52

EPS (diluted, post-except) ($) 0.16 0.44 0.51 0.52 Total liabilities & equity 1,089.7 1,196.2 1,388.7 1,537.5

DPS ($) 0.19 0.33 0.38 0.39Dividend payout ratio (%) 116.5 75.0 75.0 75.0 BVPS ($) 0.64 0.75 0.88 1.01



Sales growth 10.6 29.6 17.8 3.8 ROE (%) 24.3 63.4 63.2 55.3






EBITDA margin 25.4 33.7 33.5 33.1 Net debt/equity (%) (40.9) (22.4) (27.8) (35.6)

EBIT margin 21.8 30.3 30.1 29.4 Interest cover - EBIT (X) NM NM NM NM

Valuation 12/10 12/11E 12/12E 12/13E



D&A add-back 61.0 73.5 86.0 98.1 P/B (X) 7.7 6.5 5.6 4.9


Net (inc)/dec working capital (62.9) (141.7) (14.4) (16.1) Dividend yield (%) 3.9 6.8 7.9 8.0

Other operating cash flow 0.0 0.0 0.0 0.0Cash flow from operations 282.3 428.5 651.4 670.6


Acquisitions 0.0 0.0 0.0 0.0


Others (31.3) (20.4) 1.7 33.8

Cash flow from investments (97.0) (161.2) (130.4) (99.6)

Divid en ds p aid (commo n & p ref) (213 .1) (372 .5) (434.9) (441.5)

Inc/(dec) in debt (55.1) 0.0 0.0 0.0

Common stock issuance (repurchase) (57.5) 0.0 0.0 0.0

Other financing cash flows 6.3 0.0 0.0 0.0

Cash flow from financing (319.3) (372.5) (434.9) (441.5)

Total cash flow (134.0) (105.2) 86.2 129.5 Note: Last actual year may include reported and estimated data.



26/29



Exhibit 46:Bukit Asam (PTBA) --- summary financialsProfit model (Rp bn) 12/10 12/11E 12/12E 12/13E Balance sheet (Rp bn) 12/10 12/11E 12/12E 12/13E

Total revenue 7,909.2 11,340.0 13,205.4 13,961.3 Cash & equivalents 5,054.1 6,215.8 8,081.2 10,069.5

Cost of goods sold (4,259.0) (5,350.1) (6,293.1) (7,062.3) Accounts receivable 1,017.4 1,553.4 1,809.0 1,912.5

SG&A (1,346.0) (1,518.5) (1,677.1) (1,817.6) Inventory 423.7 513.0 603.4 677.2

R&D 0.0 0.0 0.0 0.0 Other current assets 150.8 150.8 150.8 150.8Other operating profit/(expense) 0.0 0.0 0.0 0.0 Total current assets 6,646.0 8,433.0 10,644.4 12,810.1

EBITDA 2,398.8 4,593.0 5,383.6 5,264.6 Net PP&E 1,108.5 2,030.9 2,752.5 3,439.4


EBIT 2,304.2 4,471.4 5,235.2 5,081.4 Total investments 271.0 271.0 271.0 271.0


Interest expense 0.0 0.0 0.0 0.0 Total assets 8,722.7 11,432.1 14,365.1 17,217.6

Income/(loss) from uncons. subs. (5.6) 0.0 0.0 0.0

Others 89.5 0.0 0.0 0.0 Accounts payable 1,019.2 1,465.8 1,724.1 1,934.9

Pretax profits 2,632.4 4,733.6 5,557.7 5,500.7 Short-term debt 0.0 0.0 0.0 0.0

Income tax (608.3) (1,183.4) (1,389.4) (1,375.2) Other current liabilities 128.5 128.5 128.5 128.5

Minorities 10.0 (64.9) (124.4) (108.3) Total current liabilities 1,147.7 1,594.3 1,852.6 2,063.4

Long-term debt 0.0 0.0 0.0 0.0

Net income pre-preferred dividends 2,034.1 3 ,485.3 4 ,043.9 4 ,017.2 Other long-term liabilities 1,133.7 1,133.7 1,133.7 1,133.7


Net income (pre-exceptionals) 2,034.1 3,485.3 4,043.9 4,017.2 Total liabilities 2,281.5 2,728.0 2,986.4 3,197.1


Net income 2,008.9 3,485.3 4,043.9 4,017.2 Preferred shares 0.0 0.0 0.0 0.0

Total common equity 6,366.7 8,564.7 11,115.0 13,648.5

EPS (basic, pre-except) (Rp) 883 1,513 1,755 1,743 Minority interest 74.5 139.4 263.8 372.1

EPS (basic, post-except) (Rp) 872 1,513 1,755 1,743

EPS (diluted, post-except) (Rp) 872 1,513 1,755 1,743 Total liabilities & equity 8,722.7 11,432.1 14,365.1 17,217.6

DPS (Rp) 322 559 648 644

Dividend payout ratio (%) 36.9 36.9 36.9 36.9 BVPS (Rp) 2,763 3,717 4,824 5,923



Sales growth (11.6) 43.4 16.5 5.7 ROE (%) 33.3 46.7 41.1 32.4

EBITDA growth (34.3) 91.5 17.2 (2.2) ROA (%) 23.9 34.6 31.4 25.4

EBIT growth (35.1) 94.1 17.1 (2.9) ROACE (%) 149.1 173.1 135.7 105.2

Net income growth (26.4) 73.5 16.0 (0.7) Inventory days 35.7 32.0 32.4 33.1

EPS growth (26.3) 73.5 16.0 (0.7) Receivables days 58.5 41.4 46.5 48.6


EBITDA margin 30.3 40.5 40.8 37.7 Net debt/equity (%) (78.5) (71.4) (71.0) (71.8)

EBIT margin 29.1 39.4 39.6 36.4 Interest cover - EBIT (X) NM NM NM NM

Valuation 12/10 12/11E 12/12E 12/13E

Cash flow statement (Rp bn) 12/10 12/11E 12/12E 12/13E

Net income pre-preferred dividends 2,034.1 3,485.3 4,043.9 4,017.2 P/E (analyst) (X) 23.2 13.5 11.7 11.7

D&A add-back 94.6 121.6 148.4 183.1 P/B (X) 7.4 5.5 4.2 3.5

Minorities interests add-back (10.0) 64.9 124.4 108.3 EV/EBITDA (X) 15.2 8.9 7.3 7.0

Net (inc)/dec working capital 249.2 (178.8) (87.6) 33.4 Dividend yield (%) 1.6 2.7 3.2 3.1


Cash flow from operations 2,375.5 3,493.0 4,229.1 4,342.1

Capital expenditures (557.4) (1,044.0) (870.0) (870.0)

Acquisitions (318.8) 0.0 0.0 0.0


Others (32.7) 0.0 0.0 0.0

Cas h flow from inves tments (908.9) (1,044.0) (870.0) (870.0)

Dividends paid (common & pref) (742.0) (1,287.3) (1,493.6) (1,483.8)

Inc/(dec) in debt 0.0 0.0 0.0 0.0

Common

Documents

Goldman Sachs Asian Coal 18 March 2011