In 1H20, UNTR’s net profit was down 28,3% YoY with lower revenue from construction machinery and mining contraction. Low coal prices and economic slowdown became the main factor of weak 1H20 performance. Pamapersada targets 16% YoY lower coal production for 2020 and we see the coal outlook is still sluggish until the first quarter of 2021. Hence, we downgrade the rating to SELL for UNTR.
INCO posted a net profit of USD53 million in 1H20 and in-line with our expectation. The result was supported by higher production, higher ASP, and lower production cost as crude oil and coal prices decline. We maintain estimates for 2020-2022F after INCO’s better results in 1H20 and estimate the nickel prices to hover at USD15,300-15,800/tonne until the end of 2020. Hence, we retain BUY recommendation for INCO.
PGAS reported 1H20 net profit of USD6.8 million or declining 88% YoY which means operational results still below our expectations. However, 1H20 distribution segment performed well with spread of USD2.3/MMBTU, higher than 1H19. We maintain our 2020-2022F earnings estimate and expect 2020F distribution spread to hover at USD1.7-2.0/MMBTU. Hence, we retain our BUY recommendation for PGAS.
ANTM posted a net profit of IDR85 billion in 1H20 and outperformed our expectations. In 2Q20, ANTM recorded a net profit of IDR367 billion as nickel segment posted better margin of 18.9%. So, we change our estimates for 2020-2022F after ANTM’s better results in 2Q20 and the assumption of average gold prices to USD1,830/ons for 2020F. We maintain BUY recommendation for ANTM.
TINS posted a net loss of IDR390 billion in 1H20 but improved quarterly as the company recorded revenue recovery with a net profit of IDR23 billion in 2Q20. China’s refined tin imports in May already rose 1.762% YoY, hence we see that the condition will strengthen global tin prices and have the potential to improve TINS’s ASP in 2H20. We revised our estimates for 2020F and revised up the assumption of average global tin prices to USD16,805/tonnes. We maintain BUY recommendation for TINS.
LSIP posted 1H20 net profit of IDR92 billion or jumped 778% YoY, contributing to 32% of our 2020F revised target but below our expectation by around 24%. ASP increase of 21% YoY, forex gain, and lower expenses drove an improvement in margins despite lower CPO production. We cut our 2020F estimates because of a modest 1H20 performance. However, we still maintain BUY recommendation for LSIP.
AALI reported 1H20 net profit of IDR391 billion or jumped 769% YoY, contributing to 72% of our 2020F target. ASP increase of 25.9%, lower tax rate, and cost efficiency were the main factors of solid performance despite the drop of FFB production by around 8.1% YoY. Maintain our 2020F estimates by factoring in recovery of demand and earnings growth. We continue a BUY recommendation for AALI.
ANTM recorded a modest performance with a net loss of IDR282 billion due to a decrease in revenue of up to 16.7% YoY. We revised ANTM’s estimated performance in 2020F assuming a gold sales volume of 19,888 kg and ferronickel sales volume of 26,588 TNi for 2020F plus gold ASP of IDR991 million/kg and ASP ferronickel of IDR165 million/TNi for 2020F. We still recommend BUY with TP of IDR850.
Revenue performance of PGAS in 1Q20 was stagnant with a decrease in net profit by 26.6% YoY due to forex loss of USD63 million. We predict that distribution volume will still decrease at around 8-10% MoM in May-June period due to Covid-19 pandemic. PGAS may potentially experience margin reduction in 2020, but we estimate that distribution volume increase by 4%-6% in 2021 will support the performance. We initiate to BUY with target price of IDR1,400.
