PTBA - FY23 Earnings above our and street’s forecast

PTBA - FY23 Earnings above our and street’s forecast Bukit Asam (PTBA) booked net profit of IDR2,326.6 bn in 4Q23 (-9.3% yoy/ +131.8% qoq). Consequently, the company reported a net profit of IDR6,106 bn in 2023, reflecting a decline of 51.4 yoy. Since the company has yet to release its operational data, we attribute the strong performance in 4Q23 to higher sales volume and enhanced operational efficiency. This is evident from the surprising 21.1% qoq growth in revenue, reaching IDR10,751 bn, while the COGS only increased by 6.6% qoq. Additionally, in 4Q23, G&A expenses decreased significantly by 49.7% yoy, attributed to lower salary-related expenses, while selling and marketing expenses saw a decline of 77.2% yoy due to the reversal of domestic market obligation (DMO) expenses (similar trend compared with other coal producers’ companies in 4Q23). Comment : We are positive on the news as the achievement in FY23 surpasses street expectations (113.7%) and exceeds our own estimate (127.5%). Despite the recent surge in coal prices due to the potential export ban targeting Russia's major coal producers, we maintain a bearish outlook on coal prices for 2024 and expect a continuation of earning decline for PTBA. This stance is rooted in the weak fundamentals of coal, given the stagnate import demand from major importers such as China and India.