United Tractors (UNTR) Shares: A Long-Term Investment Gem Amidst Strong market prospects
JAKARTA, investor.id – PT United Tractors Tbk (UNTR), a subsidiary of PT Astra International Tbk (ASII), continues to shine as a promising investment prospect, notably for those eyeing long-term growth. With its robust performance in heavy equipment sales, mining operations, and mineral diversification, UNTR shares are emerging as a standout choice in the Indonesian market, even rivaling customary favorites like bank shares.According to RHB Sekuritas, United Tractors’ positive outlook is anchored in several key factors: consistently high demand for heavy equipment, resilience in mining contracting despite coal price volatility, and additional revenue streams from nickel and gold sales. These elements, combined with stable profit margins, position UNTR as a resilient player in a challenging market surroundings.
strong Demand for Heavy Equipment Drives Growth
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United Tractors has reported a steady increase in demand for heavy equipment, particularly in the large machine segment. The company aims to sell 1,500 units of komatsu-branded heavy equipment this year,accounting for 32% of its total sales target of 4,600 units. This represents a 6% year-on-year (yoy) growth, reflecting the enduring strength of Indonesia’s infrastructure and mining sectors.
The company’s subsidiary,PT Pamapersada Nusantara (Pama),is also targeting a 6% yoy increase in overburden (OB) removal volume,aiming for 1.3 million bcm. This aligns with the projected rise in national coal production, which is expected to exceed 900 million tons in 2024, up from 790 million tons in the previous year.
Coal Production and Diversification Efforts
UNTR is not just relying on heavy equipment sales. The company is also ramping up coal production in its own concessions, targeting 14 million tons by 2025, a 6% yoy increase. Notably, metallurgical coal is expected to make up 4 million tons of this total.
While coal remains a notable revenue driver, UNTR is actively diversifying its portfolio. The company aims to generate 50% of its revenue from non-coal businesses by 2030. This strategic shift is evident in its focus on gold production from the Martabe mine, which currently yields around 235 thousand ounces annually. Continuous exploration and infrastructure advancement in Sumbawa are projected to add an additional 20 thousand ounces this year.
Market Risks and Adjustments
Despite its strong performance, UNTR is not immune to market risks. RHB Sekuritas highlights the potential impact of fluctuating coal prices, particularly if Newcastle coal prices drop to US$ 80-100/ton. However, the company has demonstrated versatility in adjusting contract costs to mitigate these risks.
“The contract costs are currently at their highest tier, in line with the 2024 reference coal price of around US$ 136/ton. However, this cost can be adjusted if the price of Newcastle coal falls to US$ 80-100/ton,” noted RHB Sekuritas in its research.
Investment Recommendations
RHB Sekuritas remains optimistic about UNTR’s long-term prospects, citing its diversified revenue streams, strong market position, and strategic growth initiatives. The firm’s ability to navigate market challenges while maintaining stable margins makes it an attractive option for investors seeking sustainable returns.
| Key Highlights | Details |
|—————————————-|—————————————————————————–|
| Heavy Equipment sales Target | 1,500 units (32% of total Komatsu sales) |
| Overburden (OB) Removal Target | 1.3 million bcm (6% yoy increase) |
| Coal Production Target (2025) | 14 million tons (6% yoy increase) |
| Gold Production (Martabe Mine) | 235 thousand oz (additional 20 thousand oz projected in 2024) |
| Revenue Diversification Goal (2030) | 50% from non-coal businesses |
Final Thoughts
United Tractors’ strategic focus on diversification, coupled with its strong performance in heavy equipment and mining, underscores its potential as a long-term investment. For investors looking to capitalize on Indonesia’s growing infrastructure and mining sectors, UNTR shares offer a compelling opportunity.Stay updated with the latest market insights by following investor.id’s Telegram channel.
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JAKARTA, investor.id – PT United Tractors Tbk (UNTR), a subsidiary of PT Astra International Tbk (ASII), continues to shine as a promising investment prospect, notably for those eyeing long-term growth. With it’s robust performance in heavy equipment sales, mining operations, and mineral diversification, UNTR shares are emerging as a standout choice in teh Indonesian market, even rivaling customary favorites like bank shares. According to RHB Sekuritas,United Tractors’ positive outlook is anchored in several key factors: consistently high demand for heavy equipment,resilience in mining contracting despite coal price volatility,and additional revenue streams from nickel and gold sales. These elements, combined with stable profit margins, position UNTR as a resilient player in a challenging market habitat.
Interview with Dr. Aditya Wijaya, Mining and Investment Specialist
Strong Demand for Heavy Equipment Drives Growth
Senior Editor: Dr. Wijaya, United Tractors has reported a steady increase in demand for heavy equipment, notably in the large machine segment. What do you think is driving this growth?
Dr. Aditya Wijaya: The growth in heavy equipment demand is primarily driven by Indonesia’s ongoing infrastructure advancement and the expansion of mining activities. the government’s focus on infrastructure projects, such as roads, bridges, and ports, has created a sustained demand for heavy machinery. Additionally, the mining sector, especially coal mining, continues to be a meaningful contributor to the economy, further fueling the need for heavy equipment.
Coal Production and Diversification Efforts
Senior Editor: UNTR is not just relying on heavy equipment sales. The company is also ramping up coal production in its own concessions, targeting 14 million tons by 2025. How significant is this target,and what challenges might thay face?
Dr. Aditya Wijaya: Targeting 14 million tons by 2025 is a significant goal, reflecting a 6% year-on-year increase. This target is aspiring but achievable, given the company’s existing infrastructure and expertise. However, challenges such as fluctuating coal prices, regulatory changes, and environmental concerns could impact their progress. It’s crucial for UNTR to maintain flexibility and adapt to these potential challenges.
revenue Diversification and Future Prospects
Senior Editor: UNTR aims to generate 50% of its revenue from non-coal businesses by 2030. What are your thoughts on this diversification strategy?
Dr. Aditya Wijaya: Diversification is a smart move for UNTR. Relying heavily on coal exposes the company to market volatility and regulatory risks. By expanding into non-coal businesses, such as gold and nickel mining, UNTR can create a more balanced revenue stream. This strategy not only mitigates risks but also positions the company for long-term growth in emerging sectors.
Market Risks and Adjustments
Senior Editor: Despite its strong performance, UNTR is not immune to market risks. RHB Sekuritas highlights the potential impact of fluctuating coal prices.How can UNTR navigate these risks?
Dr. Aditya Wijaya: UNTR has demonstrated resilience in adjusting contract costs to mitigate the impact of fluctuating coal prices. For instance, if Newcastle coal prices drop to US$ 80-100/ton, the company can adjust its contract costs accordingly. This flexibility,combined with its diversified revenue streams,helps UNTR maintain stable margins even in a volatile market.
Investment Recommendations
Senior editor: RHB Sekuritas remains optimistic about UNTR’s long-term prospects. What advice would you give to investors considering UNTR shares?
Dr. Aditya Wijaya: For investors seeking enduring returns, UNTR shares offer a compelling opportunity. The company’s strong market position, diversified revenue streams, and strategic growth initiatives make it a resilient player in the Indonesian market.However, investors should remain vigilant about market risks and consider a long-term investment horizon to fully capitalize on UNTR’s growth potential.
Editor: Jahari Mahardhika ([email protected])
