Investor sentiment towards Indonesian coal miner Bumi has previously been soured by its complex debt financing arrangements and a highly publicised boardroom spat. Although management has partially addressed these issues, Bumi retains a convoluted corporate structure and there is little within the group's latest half-year results that will act as a price catalyst, at least while the thermal coal market remains in the doldrums.
Operating profits doubled to $128m (£81.5m), but the group was saddled with a $109m associate loss linked to high interest payments made by Bumi Resources for a loan owed to China Investment Corp (CIC). The group is now looking to monetise non-core assets in order to pay down part of this debt. And although the comparative first-half earnings loss was lower, this was largely due to a $319m ‘fair value’ charge on financial instruments included in the 2011 interim results, which led to the hefty reported loss.
Forecast prices given by Bumi for the bulk of production over 2012 imply a significant drop in second-half realised prices. Most of Berau's mean production of 21m tonnes has been priced at $70 per tonne, while PT Bumi's expected production was priced at $80-$85 a tonne. This is set against respective first-half receipts of $76.60 and $88 per tonne, respectively.
| BUMI (BUMI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 359p | MARKET VALUE: | £647m | |
| TOUCH: | 351-360p | 12-MONTH HIGH: | 1,065p | LOW: 281p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 2121¢* | NET DEBT: | 9% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | 478 | -243 | -204 | nil |
| 2012 | 770 | -38 | -49 | nil |
| % change | +61 | - | - | - |
£1 = $1.57 *Includes intangible assets of $1.32bn, or $7.33 a share | ||||
