ITMG- FY23 Earnings below street’s forecast

ITMG- FY23 Earnings below street’s forecast Indo Tambangraya Megah (ITMG) reported a net profit of USD94.5 mn in 4Q23, (-69.1% yoy/-4.7% qoq). The decline was primarily fueled by lower ASP in 4Q23. Consequently, FY23 net profit below street estimate (90%), reaching UD500.3 mn (-58.3% yoy). Throughout 2023, ITMG witnessed a marginal increase in coal production by 1% yoy. Concurrently, sales volume experienced a 11% upturn. However, revenue plummeted by 35% to USD2.37 bn, attributable to a significant drop in average selling prices. Additionally, we note a substantial decrease in selling expenses in 4Q23 to USD3.9mn, declining by 93.8% yoy and 85.5% qoq, primarily due to the reversal of accrual related to DMO totalling USD29.9 mn in 4Q24. Comment : We anticipate a continuted earnings decline in 1Q24 on a yoy basis. Furthermore, we maintain a stance on the coal sector, forecasting a decrease in the Newcastle coal price to USD120 per tonne (-30.9% yoy) for 2024F.