ITMG - Yield Leader with Cost Advantage and Market Resilience

KBVS Update
Friday, 20 June 2025

ITMG - Yield Leader with Cost Advantage and Market Resilience
(Reinitiate with a BUY; TP: IDR 27,000)

■ Solid 1Q, Softer 2Q Ahead. ITMG booked a solid 1Q25 core profit of USD69 mn (+6.9% yoy), driven by lower cash cost at USD55/t from efficient 8.8x stripping. While 2Q25 coal prices may stay firm on strong China demand and Aussie outages, upside remains capped by HBA rules and a normalized stripping ratio (~10x).

■ Cash-Rich and Cost-Efficient, ITMG Finds Its Edge. The coal sector faces pressure from oversupply and softening demand, but Indonesia’s shift to a “coal phase-down” supports medium-term resilience. We revise ITMG’s 2025F forecast with ~22Mt output, raising revenue to USD2.2 bn (+25.1%) and net profit to USD350 mn (vs USD50 mn), despite softer ASPs. Cost is seen falling -14.2% yoy to USD56.1/t, boosting margins (16.2% NPM, EPS: IDR5,049). With 65% DPR and strong cash, yield could reach 13%, while optionality remains for renewables and critical mineral expansion.

■ Reinitiate with BUY, TP IDR 27,000. We reinitiate ITMG with a BUY and TP of IDR27,000, based on 15-year DCF (22Mt output, USD84.2/t ASP, 20% ESG discount). The stock offers the highest yield in the sector (11.8–15.3%) with low PER and strong ROE. If coal averages USD90/t in 2025F, EPS could rise +12.4% and yield hit 12.5%. Risks include HBA rigidity, post-2035 reserve outlook, FX exposure, and fuel price volatility.

Regards, 
Laurencia Hiemas - KBVS Research