Moncer’s Performance, Check Out Adaro Energy’s (ADRO) Stock Recommendations from Ciptadana Sekuritas

Reporter: Akhmad Suryahadi | Editor: Anna Suci Perwitasari

KONTAN.CO.ID – JAKARTA. PT Adaro Energy Indonesia Tbk (ADRO) managed to record a good financial performance throughout 2021. The operating income of this coal mining issuer soared 57.51% in year on year (yoy) to US$ 3.99 billion.

Thus, ADRO’s net profit flew 535.34%, from US $ 146.93 million in 2020 to US $ 933.49 million in 2021.

ADRO’s performance also grew on a quarterly basis. Ciptadana Sekuritas Asia analyst Thomas Radityo explained, Adaro Energy recorded a profit growth surge of 104.3 percent on a quarterly basis to US$ 512.6 million. This increase was mainly due to the growth in the average selling price or average selling price (ASP) very high coal.

On the other hand, ADRO’s revenue rose 41.5% quarterly to US$1.42 billion, with coal ASP growing 42.4%.

Also Read: Adaro Energy Indonesia (ADRO) Records Revenue Growth of up to 58% Throughout 2021

Cumulatively, ADRO’s net profit grew more than 6 times reflecting 102.4% of Ciptadana Sekuritas’ expectations set in 2021. Revenues that jumped 57.5% to US$ 3.9 billion were driven by higher average coal selling price growth. 63% YoY, offsetting coal sales volume which decreased by 4.7%.

Going forward, ADRO’s performance will also benefit from the coking coal business run by its subsidiary, namely PT Adaro Mineral Tbk (ADMR).

ADMR’s performance is expected to be more solid in 2022, supported by the price of coking coal which recently reached US$ 500 per ton, up 297% YoY. The solid price of coking coal is supported by a production volume of around 3.5 million tons

“This will help increase ADRO’s revenue by providing added value in terms of contribution earnings which is currently at 15%,” Thomas wrote in his research as quoted by Kontan.co.id, Friday (4/3).

Ciptadana Sekuritas raised the benchmark coal price in 2022 and 2023 to US$ 140 and US$ 100 per tonne. This is in view of the soaring coal price to a record high due to the supply crisis and rising demand side.

The increase in the estimated coal price prompted Ciptadana Sekuritas to increase the estimated average selling price of ADRO by 63.3% and 56.3% to US$ 98 and US$ 75 per tonne, respectively.

Ciptadana Sekuritas also raised the assumption of ADRO’s net profit in 2022 and 2023 by 243.3% and 377.3%, respectively, to US$1.65 billion and US$1.10 billion.

Thus, Ciptadana Sekuritas maintains its recommendation to buy ADRO shares with a higher target price of Rp 3,650 per share from the previous Rp 2,600.

Ciptadana Sekuritas maintains ADRO as one of the top picks in the coal sector. This takes into account ADRO’s ability to generate positive cash flow, ability to control costs, diversified portfolio and attractive dividend yields.