China Rescue Issuers From Loss
Alamsyah Pua Saba
Shares of coal mining issuers remain attractive. European crisis makes metal-based issuers difficult to breathe. In 2012, mining issuers are highly dependent on economic growth in China, India and East Asia.
Research Manager of Indosurya Asset Management Reza Priyambada said that the prices of shares belonging to mining-based issuers still showed a very attractive trend up to November 2011. Performance of the issuers continued to improve and could drive up the composite share price index.
It’s visible in October 2011 when shares of mining issuers started to gain appreciation from investors, following the increase in mining share index by 9.56% in one month after correcting by 24.04% in the January – September period.
Leading mining issuers already reporting their performance in the third quarter of 2011 booked an increase of above 50% in net profit on year to year basis. Net profit of PT Borneo Lumbung Energy Tbk (BORN) surged by 408.80% to Rp 1.32 trillion, PT Harum Energy Tbk (HRUM) recorded a 130% increase in net profit to become Rp 1.3 trillion and net profit of PT Bukit Asam (Persero) Tbk (PTBA) rose by 68.80% to Rp 2.33 trillion.
The increase is also visible in mining issuers producing metal. Net profit of PT Timah (Persero) Tbk (TINS) increased by 81% to Rp 860 billion and PT Aneka Tambang (Persero) Tbk (ANTM) booked a 64% increase in net profit to Rp 1.46 trillion. Only PT International Nickel Tbk (INCO) recorded a lower net profit, down by 3% to US$328.5 million.
Mining shares, said Reza, remains preserved properly. If they are corrected, it is only tentative before rebounding. Viewed from fundamental aspect, the trend is so. Issuers such as ITMG, Harum and Adaro are still very promising fundamentally.
Bob Kamandanu, General Chairman of the Indonesia Coal Mining Association (APBI) is optimistic that performance of mining issuers, mainly coal mining issuers would remain solid. Mining companies, said Bob, plan to increase their production in response to the high demand from China and India. He also does not worry about the potential of decrease in coal price due to economic downturns in the United States and Europe.
In the meantime, metal-based mining issuers are highly influential to sentiments of crisis in European Union. The price of shares, such as Inco, decreased because the company relied on the use of production goods thus decreasing a little bit in the financial performance.
“Issuers, such as BRMS have not shown good performance indeed because it is related to the accomplishment of production, even though their land is very vast,” Reza told TAMBANG Magazine.
Reza said that the crisis in European Union is actually related to the price of contract signed with the company thus being influential to financial performance of the company even though it does not affect the corporate performance directly.
It’s reflected by constant production without reducing production even though the market in America and Europe is not energetic. It is in line with statement of President Director of PT Timah Wachid Usman saying that the production of the state company continues to meet the target even though the global price of tin decreased.
Director of PT Antam, Alwinsyah Lubis also shared of the same view. He said that the corporate performance is not affected even though global crisis is predicted to continue up to next year because the price of commodities is predicted to remain good up to late year.
The most affected and most worrisome of the global crisis is the movement of share belonging to state-owned mining companies on the floor. “It seems worrisome in the stock exchange but we would see something optimistic for commodities. It may be shocked a little bit but we remain optimistic that it would remain good for commodities this year,” he said.
Not Influenced By Bridge Mahakam
In the meantime, in connection with the collapse of Bridge Mahakam II in Kutai Kertanegara, which becomes the transport lane of coal, Reza said that the incident does not influence significantly the corporate performance.
What is about issuers such as ITMG and Harum having shares corrected because of the collapse of Bridge Mahakam II? Reza doubted the statement. In his point of view, if the share price is corrected by the collapse of the bridge, why the shares of the companies was only corrected , while other companies also using the bridge as coal transport line, such as Bayan recorded an increase in share price.
Even though the re-opening of the transportation line remains uncertain, he believes that it would not take a lot of time. The line would be opened again once victim search is completed. Mahakam River constitutes an important line of coal transport because it is more effective carry coal by vessel than truck.
Commenting about impact of the collapse of Bridge Mahakam II in Kutai Kertanegara on performance of mining issuers, mainly coal mining issuers, he said that it is only a temporary issue thus not affecting coal mining issuers significantly.
The collapse of the bridge does not influence significantly. Only share of Harum and ITMG was corrected while Bayan also affected by the incident did not correct.
Chinese economy counters global crisis
In 2012, the trend would be highly determined by economic growth in China, India and other East Asian countries. Crisis in the United States and Europe would make Asian countries disturbed. It would be affected if Chinese, Indian and other East Asian economy slows down.
Reza also said that performance of mining issuers would remain bright in 2012. Performance of Indonesian mining issuers is closely related to economic condition in China, India and other East Asian countries.
“If economy in the countries continues to perform, demand for mining products would continue to come,” he went on.
Economy in the countries, said Reza, functions as shield against crisis in the United States and Europe. Nonetheless, the crisis would influence countries in Asia. The impact of the crisis would be more serious unless Chinese, Indian and East Asian economy strengthens.
“In relations thereto, the condition of issuers in 2012 would be heavily dependent on economic trend in China, India and East Asia, ,” Reza said.
If economy in countries, such as China, India and East Asia, improved, demand for Indonesian mining products would remain high and it would imply on demand for Indonesian mining products.
Commenting about performance of issuers just listing this year, such as ABM Investama, Atlas Resources and SMR Utama, Reza said that it should be observed from share performance and fundamental side. Viewed from the fundamental side, the issuers showed good income in 2011, reflected by the rising income.
“Share performance of the companies is still influenced by their liquidity. Better liquid means more attractive to investors and better capable of driving up the price of the corporate share,” he said.
In addition, Reza also recommended shares of Adaro, Bayan resources, Golden Mines, ITMG, Harum and PTBA as the most promising shares in coal mining. In the case of trading, he suggested shares of Berau, Bumi resources and Borneo Lumbung Energi & Metal.
In the case of metal based issuer, the recommended shares are of Antam and DKFT. INCO and DKFT constitute the most favorite shares in the field of trading.