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8/2/2019 BRMS Initiating Cov 01FebJan12editedMS
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Initiating Coverage | 01 February 2012
Please see important disclosure at the back of this report Page 1 of 30
Monetizing assets and potential sizable tax saving
Monetizing assets is imminent, in our view. Bumi Resources Minerals (BRMS)
has abundant diversified highquality mineral assets, with most of the projects
being green field. It needs a lot of money to develop its assets. We estimate it is
very likely for BRMS to sell some of its ownership in its subsidiaries while keeping
its majority stakes in order to unlock their value and fund their development. We
expect such partial divestment will happen after the Gorontalo and Citra Palu have
received JORC certifications in 1H12 or after the Dairi asset gets exploitation
permit.
Potential sizable corporate tax saving ahead. The biggest contributor to the
consolidated net income and cash flow is NNT. MDB, a subsidiary of BRMS, has 24%
stake in NNT. According to the Indonesian tax regulation, contribution from
associate company is not taxable if the ownership is at least 25%, which means
MDB needs to increase its stake in NNT by at least 1% in order to make NNTs
contribution not taxable. There are several ways for MDB to increase its stake at
NNT. However, we think the most likely way is increasing its stake when NNT
launches an IPO, which may happen in 2012. Based on our scenario analysis, If
contribution from NNT is not taxable, consolidated FY13F net income would
increase by 19% and 18% from our base case scenario and consensus estimates,
respectively.
Catalysts: 1) Bumi Mauritania commences its production in 1H12. 2) Gorontalo
and Citra Palu get Joint Ore Reserve Committee (JORC) certification on their
reserves in 2012. 3) issuance of exploitation permit for Dairi project. 4) MDB
increases its stake at NNT to at least 25%.
Key Risks: 1) commodity price fluctuation. 2) project delay. 3) regulatory issues.
Initiate with a Buy recommendation, Target price at Rp830. We use a
conservative SOTP valuation method which resulted in a TP of Rp830. We apply
DCF method for valuing NNT Batu Hijau, Dairi and Bumi Mauritania, while we use
investment cost plus capex for valuing Gorontalo, Citra Palu and Konblo. We doesnot take into account Bumi Japan, NNT Elang and Rinti, Dairi Lae Jahe and Base
Camp to our valuation, which may generate significant upside when they are
realized.
FINANCIAL SUMMARY
YE Dec (Rp bn) 2009A 2010A 2011F 2012F 2013F
EBITDA 3 118 95 398 896Net Profit (0) 765 722 814 1,806EPS (Rp) (253) 60 28 32 71EPS growth (%) n/a n/m (52.6) 12.7 121.9P/E Ratio (x) (2.2) 9.4 19.8 17.6 7.9EV/EBITDA (x) 48.7 67.3 181.3 47.0 19.0
P/B Ratio (x) (0.0) 0.4 0.8 0.8 0.7Dividend Yield (%) 0 0 0 0 0ROAE (%) 0.1 9.3 4.2 4.6 9.4Source: Company, Mandiri Sekuritas
FOCUSInitiating Coverage | 01 February 2011
Bloomberg Code BRMS IJ
Market Cap (Rp bn/US$ mn) 13,808/1,530
Issued Shares (mn) 25,570
Avg. Daily T/O (Rp bn/US$ mn) 8.6/0.95
Verdi Budiman
+6221 5296 9542
verdi.budiman @mandirisek.co.id
Stock data
SECTOR: METAL MINING
Current Price Rp560
Price Target Rp830(+48.2%)
Fair value Rp830
52wk range Rp500Rp800
EPS consensus
11F 12F
Consensus (Rp) 34 50
MS est. vs Consensus (%) (16.1) (36.6)
Share price performance
3m 6m 12m
Absolute (%) 1.9 (31.6) (16.9)
Relative to JCI (%) (5.3) (25.8) (31.6)
Hariyanto Wijaya, CPA, CFA
+6221 5296 9553
hari anto.wija [email protected]
Major shareholder
Bumi Resources 87.0%
Others 12.9%
BUYBumi Resources Minerals
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Initiating Coverage | 01 February 2012
Please see important disclosure at the back of this report Page 2 of 30
Investment thesis
In progress to become one of the leading metal mining companies in Asia
BRMS through its subsidiaries has diversified mineral assets, i.e. gold, copper, zinc, lead, iron ore, molybdenum, and
diamond in several locations in three countries, i.e. Indonesia, Liberia, and Mauritania. From risk managementperspective, various locations reduce localrelated risks, such as local government regulation and natural disaster.
Currently, only gold and copper are in production at BRMS associate company, i.e. Newmont Nusa Tenggara (NNT).
Meanwhile, the other commodities are in development stage. BRMS has effective stake of 18% in NNT. The majority
stake in NNT is owned by Newmont Mining Corporation (NEM US), a listed company in New York Stock Exchange.
Newmont Mining Corporation also acts as the operator in NNT.
EXHIBIT 1. BRMS MINERAL ASSETS ARE SPREADED IN SEVERAL LOCATIONS
Source: Company
EXHIBIT 2. MINERAL ASSET PORTFOLIO AT VARIOUS LEVEL OF DEVELOPMENT CYCLE
Source: Company
NNT (batu hijau)
Mauritania
Dairi (Anjing Hitam)
GorontaloCitra Palu
Konblo Bumi (Liberia)
Asset
PRODUCTION
2010 2011 2012 2013 2014
DEVELOPMENT DSO PRODUCTION PRODUCTION
2015
EXPLORATION AND DEVELOPMENT ACTIVITIES
DEVELOPMENT PRODUCTION
FEASIBILITY STUDIESFEASIBILITY STUDIES
DEVELOPMENTDEVELOPMENT
PRODUCTIONPRODUCTION
FIRST PHASE SECOND PHASE
Ex
ploration
Pr
oduction
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Projects
Effective
stake Has got exploration permit? JORC certification Others
NNT (elang & rinti) 18% Yes. Valid from Sep'10-Feb'30 not yet
Mauritania 53% Yes. Expect in 1H12 Obtained exploitation permit in Jan'12
Dairi 80% Yes. Got in October 2010 Yes Obtained Principle Agreement for
Underground Mining in Nov'11
Gorontalo 80% Yes. Got in December 2010 Expect in 2H12
Citra Palu 97% Yes. Got in September 2011 Expect in 2H12
Konblo Bumi (Liberia) 94% Yes. Under seven exploration permits not yet
EXHIBIT 3. BRMS HAS VARIOUS MINERAL ASSETS AT ITS SUBSIDIARIES LEVEL
Source: Company
Monetizing its mineral assets is imminent, in our view. BRMS has abundant diversified highquality mineral assets
at its subsidiary levels, but most of the projects are still green field. It would take a lot of money to develop them until
they start production. We estimate it is very likely that BRMS will partly divest its ownership in its subsidiaries while
maintaining its majority stakes in order to unlock its subsidiaries value and develop their projects. We estimate
divestment may happen after Gorontalo and Citra Palu have got JORC certifications in 2012 or after Dairi gets
exploitation permit.
EXHIBIT 4. PROGRESS FOR EACH PROJECTS
Source: Company, Mandiri Sekuritas
13% 87%
. . .
100% 60%
. .
Investment Holding Companies
Operating/Developing companiesMarketing Service company
1 Subject to progressive divestment to 49.0 % beginning from the end of the fifth year after commencement of production at the Gorontalo project(2)
3 Subject to dilution to 80.0%
In January 2012, Bumi Holding SAS divest its ownership by 10% to Government of Mauritania to meet Mauritania regulation. Government of
Mauritania has an option to get additional 10% ownership.
PT Newmont
Nusa
Tenggara
Herald
Resources
Ltd.
Gain and Win
Pte. Ltd.
PT Dairi Prima
Mineral
PT Multi
Daerah
Bersaing
Bumi
Mauritania SA
Public
PT Bumi
Resources Tbk
(BUMI)
PT Bumi
Resources
Minerals Tbk
International
Minerals
Company LLC80%
53.39%
Calipso
Investment
Pte. Ltd.
PT Multi
Capital
Konblo Bumi
Inc. (Liberia
Project)
Lemington
Investments
Pte. Ltd.
Bumi Holding
S.A.S
Bumi
Resources
Japan
PT Sarkea
Prima
Minerals
PT Gorontalo
Minerals
PT Citra Palu
Minerals
96.97% 94.1%
Effective
ownership
Effective
ownership
Effective
ownership
Effective
ownership
Effective
ownership
Effective
ownership
Effective
ownership18.0% 100.0% 80.0%80.0%
Legend
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NNT would IPO in 2H12, which would unlock its value and open door for MDB for increasing its stake in NNT
NNT has got approval to launch IPO from its shareholders on 19 August 2010. NNT plans to offer 10% in new shares
after the divestment of 7% of foreign investors stake in NNT has been settled. NNT had planned to go public in 2011
but as the 7% divestment stalled, the IPO of NNT is being delayed. The 7% was purchased by the Government of
Indonesia, but the payment has yet to be paid pending endorsement from the Energy and Mineral Resources Ministerand clearance from the BKPM. The divestment process may be completed in 1H12. Therefore, the IPO of NNT may be
done in 2H12. The IPO will unlock the value of NNT itself. Soon after IPO, in our view MDB would buy NNTs share in
the secondary market in order to increase its stake in NNT to at least 25% in order to get corporate tax saving at MDB
level.
Potential sizable corporate income tax saving if MDB increases its stake at NNT to at least 25%
According to the Indonesian tax regulation, corporate income tax is calculated on company basis, not on
consolidated basis. Equity in net income of associated company is not taxable. Meanwhile, dividend receipt from
associated company is taxed at corporate income tax rate. However, dividend receipt is not taxable if all three
conditions are fulfilled. Currently, the only condition has not been fulfilled by MDB is its ownership in NNT, which is
still below 25%. There are several ways for MDB to increase it; 1) purchase the latest 7% divestment of NNT, 2)
purchase the stake from Pukuafu Indah or Indonesia Masbaga Investama, 3) purchase in the secondary market after
the NNTs IPO. Any of the ways will bring double benefits for MBD: 1) no more tax on equity in NNTs dividend. 2)
entitled for higher proportion from NNTs earnings and dividend. At the moment, we think the most possible is a
purchase in the secondary market. We have not factored in the corporate tax saving in our model, but based on our
scenario analysis there will be sizable corporate tax saving of around Rp424bn in FY13F (62.8% of FY13F consolidated
corporate income tax) which should increase FY13F consolidated net income by 333bn (19% and 18% from our base
case scenario and consensus estimates, respectively).
EXHIBIT 5. DIVIDEND RECEIPT FROM NNT IS NOT TAXABLE IF MDB INCREASES ITS STAKE AT NNT FROM CURRENT 24% TO
AT LEAST 25%
Source: Mandiri Sekuritas, Indonesian tax regulation
Revenue xxxx Revenue xxxx
Gross profit xxxx Gross profit xxxx
Operating profit xxxx Operating profit xxxx
Pretax income xxxx Equity in associated company's net income A X 24% Not taxable
Corporate tax (Tax rate= 35%) xxxx Pretax income xxxx
Net income A Corporate tax (Tax rate= 25%) xxxx
Net income xxxx
Cash Flow from Operating activities xxxx Cash Flow from Operation xxxxCash Flow from Investing activities: xxxx Cash Flow from Investing activities: xxxx
Cash Flow from Financing activities: xxxx Dividend received B X 24%
Dividend paid B Cash Flow from Financing activities xxxx
1 Dividends received from an Indonesian company by limited liability company incorporated in Indonesia
2 Dividends are paid out of retained earnings
3 Have at least 25% of the paid-in capital in the company distributing dividend
Meet the condition?
Yes
YesNot yet. We estimate MDB would
increase from 24% to at least 25% by
buying NNT shares after NNT IPO
PT NNT (an associate company) PT MDB (a subsidiary company)
Income Statement
Dividend received is not taxable if MDB meets all 3 conditions:
Taxable at
Corporate
income tax rate
Cash flow StatementCash flow Statement
Income Statement
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Rp bn 2009 2010 2011 2012 2013
% MDB ownership in NNT at end of year 17% 24% 24% 24% 24%INCOME STATEMENT
Equity in net income of NNT 488 2,132 1,231 1,462 2,615 Not taxable
Consolidated pre tax income 422 1,422 953 1,248 2,970
CASH FLOW STATEMENT
Dividend received from NNT - 1,583 439 522 2,037
% dividend received from NNT to consol pre tax incom 0% 111% 46% 42% 69%
Consolidated income tax
BRMS only - - - - -Subsidiaries:
Bumi Resources Japan - 31 48 52 62
MDB (parent company of NNT) - 268 29 41 424
Bumi Mauritania - - - 68 68
Dairi Prima - - - - 120
TOTAL Consolidated Income tax - 299 77 161 675
Consolidated net i ncome (net of Minority) (0) 765 722 814 1,806
Consolidated income tax
MDB (parent company of NNT) - 268 29 41 -TOTAL Consolidated Income tax - 299 77 161 251
Increase
in Net
Income
% Increase
Consolidated net i ncome (net of Minority) (0) 765 722 814 2,140 333 19%
Taxable at
Corporate
tax rate
Base case scenario: MDB's stake in NNT stay at 24%. Dividend received from NNT is taxable
Scenario analisis: If dividend received from MDB is n ot taxable si nce 2013
EXHIBIT 6. THE BIGGEST COMPONENT OF CORPORATE TAX EXPENSE COMES FROM CORPORATE INCOME TAX ON
DIVIDEND RECEIPT FROM NNT. THERE WOULD BE SIZABLE CORPORATE TAX SAVING IF MDB INCREASES ITS STAKE AT NNT
TO AT LEAST 25%.
Source: Mandiri Sekuritas
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(1,500)
(1,000)
(500)
0
500
1,000
1,500
2,000
2,500
3,000
2009 2010 2011F 2012F 2013F
Rp bn
Revenue Equity in NNT net income
Interest expenses Corporate tax
Net Income (net of minority)
Earnings grow by 2010-2013F CAGR of 33.2%
We forecast consolidated net income (net of minority) to grow by a CAGR of 33.2% from Rp765bn in FY10 to
Rp1,806bn in FY13F. The main contributors of the growth are: 1) higher equity income from investment in NNT. We
estimate NNT gold and coopers production will be back to its 2010 peak level in 2013 as the Phase 6 mine site willstart production in 2013, 2) higher earnings contribution from BUMI Mauritania because BUMI Mauritania is in the
process to ramp up its production after it starts production in 2012, 3) Dairi Prima will start to generate earnings in
2013, 4) higher sales of Bumi Japan.
EXHIBIT 7. EARNINGS GROW BY 2010-2013F CAGR OF 33.1% COMES FROM HIGHER REVENUE AND EQUITY INCOME
Source: Mandiri Sekuritas
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SWOT Analysis
EXHIBIT 8. SWOT ANALYSIS
Strengths World class, highquality metal assets
Diversified metal exposures
Located in various locations
Weaknesses Most of projects are greenfield projects
Biggest contributor to net income comes from
NNT, meanwhile BRMS does not have control
over NNT
Opportunities
Potential significant tax saving if MDB able to
increase its stake in NNT to at least 25%
Substantial revenue streams from new mines
Significant upside in reserves and resources
from NNT Elang and Rinti
Threats
Regulation risk
Delay in projects
Increase in costs
Lower earnings and dividend received from
NNT
Source: Mandiri Sekuritas
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EV (100%)
using DCF
Investments
(book value)
Capital
expenditure
BRMS'
Value
US$mn US$mn US$mn US$mn
NNT - Batu Hijau DCF with WACC = 12.0% and TV growth = 0% 9,643 18% 1,736
NNT - Elang and Rinti Not valued 18% -
Dairi Prima Minerals DCF with WACC = 12.0% and TV growth = 0% 606 80% 485
Gorontalo Minerals Investment Cost + Capex 39 105 80% 115
Citra Palu Minerals Investment Cost + Capex 17 80 97% 94
Bumi Mauritania DCF with WACC = 12.0% and TV growth = 0% 236 53% 126
Konblo Bumi Inc. (Liberia) Investment Cost + Capex 45 94% 42
Bumi Resources Japan Not valued 100% -
Total BRMS' value, US$mn 2,598
Forex 9,100
Total BRMS' value, Rp bn 23,642
Net Debt - 31 December 2011, Rp bn 2,309
Equity Value, Rp bn 21,333
No. of shares (mn) 25,570
Equity Value per share, Rp 830
Current Share price 560
Potential upside 48.2%
Projects Valuation MethodEffective
Stake
Valuation
Deriving TP: Rp830 per share using conservative SOTP valuation method
We initiate our coverage on BRMS with a Buy recommendation with TP: Rp830 per share, which implies PER FY12F,
FY13F of 26.1x and 11.8x, respectively. Our Target Price also implies PBV FY12F, FY13F of 1.2x and 1.1x, respectively.BRMS is one of few mineral companies, which are traded below its par value. We use conservative SOTP valuation
method to value BRMS share value. We use: 1) DCF method for valuing NNT Batu Hijau, Dairi Anjing Hitam and
Bumi Mauritania. 2) Investment cost plus capital expenditure for valuing Gorontalo, Citra Palu and Konblo Bumi. 3)
We do not value NNT Elang and Rinti, Dairi Lae Jahe and Base Camp and Bumi Japan.
Sizable upside to our valuation on NNT Elang and Rinti, Gorontalo, Citra Palu, Dairi Lae Jahe and Base Camp
Our valuation on BRMS is exposed to sizable upside when NNT Elang and Rinti, Gorontalo, Citra Palu, Dairi Lae Jahe
and Base Camp is realized. The biggest upside may come from NNT Elang whose reserve is significantly higher than
the Batu Hijau mine, according to a preliminary estimate by Newmont Mining Corporation.
EXHIBIT 9. DERIVING TARGET PRICE OF RP830 USING SOTP METHOD
Source: Mandiri Sekuritas
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Unit 2009 2010 2011F 2012F 2013F
Macro
Average exchange rate(Rp/US$) Rp full 10,396 9,084 8,818 9,101 9,101
NNT Batu Hijau
Production volume
Gold ('000 oz) 560 737 380 400 730
Copper (mn lbs) 494 542 320 350 540
Sales volume
Gold ('000 oz) 550 656 380 400 730
Copper (mn lbs) 498 489 320 350 540
Average Selling Price
Gold (US$/oz) 1,000 1,183 1,570 1,650 1,650
Copper (US$/lbs) 2.59 3.45 3.50 3.55 3.55
Cost Applicable to sales
Gold (US$/oz) 214 237 440 440 430Copper (US$/lbs) 0.62 0.69 1.10 1.10 1.05
Amortization
Gold (US$/oz) 55 63 100 100 100
Copper (US$/lbs) 0.16 0.19 0.22 0.22 0.23
Reclamation and remediation
Gold (US$/oz) 4.00 5.00 8.00 8.00 8.00
Copper (US$/lbs) 0.01 0.01 0.02 0.02 0.02
Dividend payout ratio 0% 78% 36% 36% 78%
Bumi Mauritania
Production volumeIron ('000 tonnes) - - - 600 600
Sales volume
Iron ('000 tonnes) - - - 600 600
Average Selling Price
Iron (US$/ton) - - - 115 115
Cash Cost per unit
FOB (US$/ton) - - - 65 65
Dairi
Production volume
Ore ('000 tonnes) - - - - 130
Zinc ('000 tonnes) - - - - 19Lead ('000 tonnes) - - - - 10
Silver ('000 oz) - - - - 42
Sales volume
Zinc ('000 tonnes) - - - - 19
Lead ('000 tonnes) - - - - 10
Silver ('000 oz) - - - - 42
Average Selling Price
Zinc (US$/ton) - - - - 2,200
Lead (US$/ton) - - - - 2,200
Silver (US$/oz) - - - - 30
Cash Cost per unit
Mining opex (US$/ton) - - - - 46Processing cost (US$/ton) - - - - 36
Royalties (US$/ton) - - - - 21
EXHIBIT 10. KEY ASSUMPTIONS
Source: Company, Mandiri Sekuritas
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Gold price FY12F FY13F FY12F FY13F
Base case (US$/oz) 1,650 1,650
10.0% 879 1,915 8.0% 6.0%5.0% 846 1,861 4.0% 3.0%
Rpbn Base case 814 1,806 0.0% 0.0%-5.0% 782 1,752 -4.0% -3.0%
-10.0% 749 1,697 -8.0% -6.0%
Cooper price FY12F FY13F FY12F FY13F
Base case (US$/lbs) 3.55 3.55
10.0% 936 1,980 15.0% 9.6%5.0% 875 1,893 7.5% 4.8%
Rpbn Base case 814 1,806 0.0% 0.0%
-5.0% 753 1,719 -7.5% -4.8%-10.0% 692 1,632 -15.0% -9.6%
Sales Volume FY12F FY13F FY12F FY13F
Base caseGold ('000 oz) 400 730Copper (mn lbs) 350 540Iron ('000 tons) 600 600Zinc ('000 tons) 19Lead ('000 tons) 10Silver ('000 oz) 42
10.0% 949 2,048 16.6% 13.4%5.0% 882 1,927 8.3% 6.7%
Rpbn Base case 814 1,806 0.0% 0.0%-5.0% 746 1,685 -8.3% -6.7%-10.0% 679 1,564 -16.6% -13.4%
Operating expenses FY12F FY13F FY12F FY13F
Base caseNNT:
Gold (US$/oz) 440 430Copper (US$/lbs) 1.10 1.05
Mauritania:
Iron (US$/ton) 115 115Dairi:
Mining opex (US$/ton) 46Processing cost (US$/ton) 36
10.0% 742 1,701 -8.8% -5.8%5.0% 778 1,753 -4.4% -2.9%
Rpbn Base case 814 1,806 0.0% 0.0%-5.0% 850 1,859 4.4% 2.9%
-10.0% 886 1,911 8.8% 5.8%
Average Forex FY12F FY13F FY12F FY13F
Base case (Rp/US$) 9,101 9,101
10.0% 891 1,990 9.4% 10.2%5.0% 852 1,898 4.7% 5.1%
Rpbn Base case 814 1,806 0.0% 0.0%-5.0% 776 1,714 -4.7% -5.1%
-10.0% 737 1,623 -9.4% -10.2%
Net Income Change (%)
Net Income Change (%)
Dairi is still not
production
Net Income Change (%)
not in
Net Income Change (%)
Net Income Change (%)
Sensitivity analysis
EXHIBIT 11. SENSITIVITY ANALYSIS
Source: Mandiri Sekuritas
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TICKER COMPANY NAME 2012F 2013F 2012F 2013F 2012F 2013F
NEM US NEWMONT MINING CORP 11.2 10.5 1.8 1.6 5.9 5.4
ASR CN ALACER GOLD CORP 12.1 10.3 1.8 1.5 7.4 5.0
ARZ CN AURIZON MINES LTD 12.1 10.3 2.3 1.8 4.6 3.4
CG CN CENTERRA GOLD INC 9.3 7.6 2.3 1.9 5.5 4.9
ELD CN ELDORADO GOLD CORP 16.0 13.3 2.2 2.0 8.6 7.5
IAG US IAMGOLD CORP 12.4 9.6 1.6 1.4 5.3 4.4POG LN PETROPAVLOVSK PLC 6.6 5.7 1.0 0.9 4.8 4.0
SMF CN SEMAFO INC 12.0 10.2 2.5 2.0 6.3 5.2
Simple average 11.5 9.7 2.0 1.6 6.1 5.0
ANTO LN ANTOFAGASTA PLC 11.8 10.9 2.5 2.2 4.8 4.6
AVM CN ANVIL MINING LTD 8.3 6.9 1.4 1.0 4.1 3.3
CS CN CAPSTONE MINING CORP 15.3 13.8 1.1 1.0 5.6 4.7
CUM CN COPPER MOUNTAIN MINING CORP 4.6 3.7 2.0 1.2 4.8 3.5
FCX US FREEPORT-MCMORAN COPPER 10.6 8.5 2.4 2.0 4.9 3.9
IMN CN INMET MINING CORPORATION 12.3 10.1 1.3 1.1 5.6 4.7
Simple average 10.5 9.0 1.8 1.4 5.0 4.1
BRMS IJ BUMI RESOURCES MINERALS 17.6 7.9 0.8 0.7 47.0 19.0
PER (x) PBV (x)
GOLD PEERS
COPPER PEERS
EV/EBITDA (x)
Relative valuations
It is not appropriate to compare BRMS with its peers as there are no peers with relatively similar asset size and
portfolio, earnings profile, and project development stages.
EXHIBIT 12. PEERS COMPARISON
Source: Bloomberg, Mandiri Sekuritas
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13% 87%
99.99% 99.99% 20% 100% 99.99% 100%
75% 100%
100% 60%
24% 80% 80% 96.97% 89% 94.1%(
Investment Holding CompaniesOperating/Developing companiesMarketing Service company
(1) Subject to progressive divestment to 49.0 % beginning from the end of the fifth year after commencement of production at the Gorontalo pro
(2)
(3) Subject to dilution to 80.0%
Public
PT Bumi
Resources Tbk
(BUMI)
PT Bumi
Resources
Minerals Tbk
International
Minerals
Company LLC
In January 2012, Bumi Holding SAS divest its ownership by 10% to Government of Mauritania to meet Mauritania regulation. Government ofMauritania has an option to get additional 10% ownership.
PT Newmont
Nusa Tenggara
Herald
Resources Ltd.
Gain and Win
Pte. Ltd.
PT Dairi Prima
Mineral
PT Multi
Daerah
Bersaing
Calipso
Investment Pte.
Ltd.
PT Multi
Capital
Lemington
Investments
Pte. Ltd.
Bumi Holding
S.A.S
96.97%
Effective
ownership
Effective
ownership
Effective
ownership
Bumi
Mauritania SA
Effective
ownership
Bumi Resources
Japan Company
Limited
PT Sarkea
Prima Minerals
PT Gorontalo
Minerals
PT Citra Palu
Minerals
80%
53.39%
Konblo Bumi Inc.
(Liberia Project)
94.1%
Legend
Effective
ownership
Effective
ownership
Effective
ownership18.0% 100.0% 80.0%80.0%
About the company
Company
Bumi Resources Minerals (BRMS) is a company in the metal sector holding a portfolio of subsidiaries having operations and
exploration prospects in Indonesia as well as in Mauritania and Liberia, Africa. Its core operations are the exploration anddevelopment of gold, copper, zinc, lead and molybdenum deposits in Indonesia, iron ore in Mauritania and minerals in
Liberia. BRMS has 75.0% stake in Multi Daerah Bersaing (MDB). Meanwhile, MDB owns 24.0% of the shares in NNT, a
company whose main asset is the Batu Hijau Mine, the second largest coppergold mine in Indonesia and Asia in terms of
estimated production, according to AMEs estimates. BRMS provide coal and other mineral sales, marketing and consulting
services through Bumi Japan, which accounted for all of its current consolidated revenues.
Corporate Structure. BRMS was established in 2003 as PT Panorama Timur Abadi, a company in the business of selling
lubricant oil. In July 2009, BUMI Resources (BUMI) purchased 99.8% of Panorama from an unrelated third party to hold
BUMIs noncoal mining assets, and subsequently changed the name of Panorama to PT Bumi Resources Minerals. After a
series of reorganization in the second half of 2009 and in 2010, the Company became the holding company for certain ofthe minerals and related business operations.
EXHIBIT 13. CORPORATE STRUCTURE
Source: Company
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2011F 2012F 2013F
Mauritania 40 50 50 140
For feasibility studies, drilling and other exploration costs, and
productions costs in relation to the 600,000 tonnes per annum ofdirect shipping ore
Dairi 100 100 11 211
For construction and equipment purchases and to bring the mine
to production
Gorontalo 35 70 0 105 For exploration, drilling and feasibility studies
Citra Palu 30 50 0 80 For feasibility studies and exploration program
Liberia 35 5 5 45 For exploration activities
TOTAL 240 275 66 581
Capex allocationTotal The usage of capex
US$ mn
100 100
11
40 50
50
35
7030
5035
5
5
2011F 2012F 2013F
Dairi Mauritania Gorontalo Citra P alu Liberia
Total= US$240mn
Total= US$275mn
Total= US$66mn
Mauritan ia commences DSO Dairi commences production
Capital Expenditure and source of fund
BRMS will spend a total of US$581mn for capital expenditure in FY11FFY13F for Dairi (US$211mn), Bumi
Mauritania(US$140mn), Gorontalo (US$105mn), Citra Palu (US$80mn) and Liberia projects(US$45mn). Meanwhile, capital
expenditure of NNT will be funded by NNT itself through various options, such as loans and/or an initial public offering tofund capital expenditures and operations of the Phases 6.
Total Capex of US$105mn for the Gorontalo project in FY11FFY12F is enough only up to exploration and get JORC
certification. We estimate total capex could reach around US$1bn for construction and to bring the mine to production.
EXHIBIT 14. CAPITAL EXPENDITURES IN FY11F-FY13F
Source: Company, Mandiri Sekuritas
EXHIBIT 15. THE USAGE OF CAPITAL EXPENDITURE
Source: Company, Mandiri Sekuritas
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BRMS' Cost of acquisition NNT % of Stake No of shares Completed inCost
(US$mn)
Implied cost per 1% stake
(US$mn)
Phase 1 10% 683,407 16-Nov-09 391.0 39.1
Phase 2 7% 478,385 11-Dec-09 246.8 35.3
Phase 3 7% 478,385 15-Mar-10 246.8 35.3
Total 24% 1,640,177 884.6
Operating companies
Newmont Nusa Tenggara
Ownership structure of Newmont Nusa Tenggara
Under the Contract of Work in 1986 between the Indonesian government and NNT, 51% of NNTs shares must be
divested, first, to the Indonesian government or, second, to Indonesian nationals by March 31, 2010. Currently, the
last divestment of 7% of the stake is still in the progress, which Pusat Investasi Pemerintah (PIP) is the buyer of the
divestment.
MDB, a 75% BRMS owned subsidiary, holds 24% stake in NNT after a series acquisitions.
EXHIBIT 16. OWNERSHIP STRUCTURE OF NEWMONT NUSA TENGGARA AS OF 31 DECEMBER 2010
Source: Company
EXHIBIT 17. BRMS COST OF ACQUISITION NEWMONT NUSA TENGGARA
Source: Company, Mandiri Sekuritas
Newmont Mining Corp Sumitomo Corp
Nusa TenggaraPartnership
PT Multi DaerahBersaing
PT Pukuafu Indah PT Indoneia MasbagaInvestama
PT NewmontNusa Tenggara
Batu HijauConcession
56.25% 43.75%
PT Multi Capital
PT Bumi ResourcesMinerals Tbk (BRMS)
24%17.8% 2.2%
56%
99.9%
75%
ElangConcession
RintiConcession
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Batu Hijau Gold Reserves Grade
2010 100% Equity Gold 100% Equity
(oz/ton)
Proved 348,500 62,640 0.014 4,872 877
Probable 609,000 109,620 0.004 2,436 438
Proved and Probable 957,000 172,260 0.008 7,656 1,378
Batu Hijau Copper Reserves Grade
2010 100% Equity Copper 100% Equity
(%)
Proved 348,500 62,640 0.50% 3,584 645
Probable 609,000 109,620 0.35% 4,125 743
Proved and Probable 957,000 172,260 0.40% 7,709 1,388
(mm lbs)(000 tons)
Tonnage (Ore)
(000 tons)
Contained Gold
Tonnage (Ore) Contained Copper
(000 oz)
Newmont Nusa Tenggara Batu Hijau copper and gold mine
Batu Hijau is a large scale open pit gold and copper mine located in Southwest Sumbawa, Indonesia. Batu Hijau
has a large copper/gold deposit, which Newmont Mining Corporation discovered in 1990. Development and
construction activities began in 1997 and startup occurred in late 1999.
Contract of Work (third generation) signed with Indonesian Government in 1986. Under the Contract of Work, NNThas the right to continue operating the project for 30 years from operational startup, or longer if approved by the
Indonesian government.
One of only three mines in the world with total ore tonnage in excess of 1 billion tonnes and gold grades higher
than 0.2g/t. One of the lowest cost gold or copper operations in the world ($ 0.7/ lb copper ; $ 237/ oz gold in
2010)
The mine is at an elevation of 450 meters (1,476 feet) above sea level and 25 kilometers (15 miles) from the
companybuilt port in Benete Bay. Ore is mined from the open pit by electric shovels and 240ton haul trucks. The
ore is crushed and conveyed 6.4 kilometers (4 miles) to the concentrator which is capable of processing 140,000
tonnes per day through two grinding mill circuits and five flotation lines. The final concentrate is then pumped to
the port, where it is filtered and then shipped to smelters in Asia and Europe.
At the end of 2010, Batu Hijau has reserve of 7.7bn lbs of copper and 7.6mn oz of gold. Newmont Mining
Corporation estimate there is potential increase in reserves up to ~30%50% of current gold and copper Reserves
over the next decade.
Batu Hijaus production is expected to decrease in FY11F and FY12F as it moves into Phase 6 stripping since 2H10,
whereas FY13F production volume is expected to be similar to its peak performance in 2010.
EXHIBIT 18. NNT BATU HIJAU GOLD AND COPPER RESERVES
Source: Company
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EXHIBIT 19. NNT BATU HIJAU
Source: Newmont 2010 factbook
EXHIBIT 20. LOCATION OF BATU HIJAU, ELANG AND RINTI
Source: Company
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Newmont Nusa Tenggara Elang and Rinti
Currently, Elang project is a green field project. Elang project represents an opportunity in earlystage
development that could eventually exceed the size of current operation at Batu Hijau. Newmont Mining
Corporation estimates Elangs potential to be approximately 25 million ounces of gold and 15 billion pounds of
copper on a 100% basis a worldclass deposit by any measure. NNT has received an exploration permit for Elang that is valid from September 27, 2010 to February 28, 2030.
Newmont Mining Corporation forecasts commercial production in Elang mine will start since 2020.
The Rinti exploration area is 80 kilometers east of the Batu Hijau Mine and 20 kilometers from the Elang prospect.
Further exploration is required to determine the economic potential and to generate a JORC compliant resource
statement.
EXHIBIT 21. NNT ELANG MINE PLAN
Source: Newmont Mining Corporation
Dairi
Dairi is a very high grade zinc resource located in North Sumatra and is proposed to be developed as an
underground mining operation. Its mining concession is located strategically with respect to smelters and
shipping routes.
Dairi signed Contract of Work with Indonesian Government in 1998. The Contract of Work has a 30 year term from
the commencement of production.
A series of permits has been get in order to start production: exploration borrow and use permit in October 2010,
Presidential Decree to allow underground mining within protected forest area in May 2011, obtained PrincipleAgreement for underground mining in Nov 2011.
Dairi is one of the highest grade zinc deposits in the world (Grades of 11.5% Zn, 6.8% Pb and 7.5 g/t Ag). Low
estimated net byproduct cash cost of US$0.21/lb.
The JORC standard Reserve and Resource was completed by CSA Global (Australia) in Oct 2010 and Mining Plus
Pty.Ltd in Feb 2011.
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Sites Combined Reserves
Proven 4.95 Mt at 14.8% Zn, 9.1% Pb, 11.5 Ag g/t
Probable 0.93 Mt at 11.3% Zn, 7.0% Pb, 10.1 Ag g/t
Lae Jahe Probable 5.17 Mt at 8.4% Zn, 4.5% Pb, 3.3 Ag g/t
TOTAL RESERVES 11.05 Mt at 11.5% Zn, 6.8% Pb, 7.5 Ag g/t
Sites Combined Minerals Resources
Anjing Hitam 8.11 Mt at 14.6% Zn, 9.1% Pb, and 12 Ag g/t
Lae Jahe 16.18 Mt at 8.2% Zn, 4.5% Pb
Base Camp (shale hosted) 0.49 Mt at 5.5% Zn, 5.7% Pb, and 10 Ag g/t
Base Camp (carbonate hosted) 0.34 Mt at 4.2% Zn, 4.0% Pb, and 20 Ag g/t
TOTAL RESOURCE 25.12 Mt at 10.1% Zn, 6.0% Pb
Anjing Hitam
EXHIBIT 22. DAIRI HAS SIGNIFICANT RESERVES AND RESOURCES
Source: Company
EXHIBIT 23. DAIRI PROJECT IS LOCATED IN NORTH SUMATRA
Source: Company
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Mineral Inventory 100% Mineral Grade Metal contain
100%
Mauritania Project 100,000 Iron 58% 58,000 MT
(000 tonnes)
Tonnage (Ore)
Mauritania
Currently, active in these two following areas: Tamagot region, south of the town of Akjoujt, and 250 km North
East of the capital Nouakchott. Sfariat region, 250 km north of the town of Zouerat in northern Mauritania
Two potential producing operations: 1) Direct shipping ore from Tamagot region. 2) Concentrate for pellet feed
from Sfariat region DSO production expected to commence in early 2012
Bumi Mauritania got exploitation permit in January 2012.
EXHIBIT 24. BUMI MAURITANIAS RESERVES AND RESOURCES
Source: Company
EXHIBIT 25. BRMS PERMITS IN MAURITANIA
Source: Company
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Mineral Inventory Mineral Grade
Gorontalo Project 125,000 100,000 Gold 0.55 g/tonne 2.4 mm oz 1.9 mm oz
Copper 0.75% 2,067 mm lbs 1,653 mm lbs
Tonnage (Ore)
Contained Metal(000 tonnes)
Gorontalo
BRMS has Contract of Work lincense of a 36,070 hectare mining concession located in the Bone Bolango Regency
(Province of Gorontalo). BRMS obtained Exploration Borrow & Use Permit in December 2010.
Based on explorations to date, the following have been identified in the concession:
Four copper and gold systemsThree gold, silver and copper systems
Four gold and silver systems
JORC Resource to be completed by end 2012 with commissioning expected in 2H 2014
Conceptual development model is to build a 25 million tonnes per annum (feed tonnes) copper concentration
plant that would be able to process 0.6% of copper and 0.6 grams per tonne of gold material
EXHIBIT 26. GORONTALOS RESERVES AND RESOURCES
Source: Company
EXHIBIT 27. BRMS HAS COW RIGHTS TO A 36,070 HECTARE MINING CONCESSION LOCATED IN PROVINCE OF GORONTALO
Source: Company
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Mineral Grade
100% Equity 100% Equity
2,500 2,400 Gold 7.5 g/tonne 0.7 mm oz 0.6 mm oz
Citra Palu Project
106,000 103,000 Molybdenum 0.14% 8 mm lbs 7 mm lbs
Tonnage (Ore)
(000 tonnes)
Contained Metal
Citra Palu
Citra Palu has rights to a 138,889 hectare mining concession in Central Sulawesi and South Sulawesi, Indonesia through a
COW Contract area consists of six separate blocks, of which the Poboya Gold Prospect is the most promising.
Initial mineral inventory of: Blok 1: 2.5 million tonnes with 7.5 g/t gold
Blok IV: 106 million tonnes at 0.14% molybdenum
Conducted a baseline study on economic, social, health and environment in preparation for a detailed infill drilling
program in 2011
JORC Resource to be completed by end 2012 with commissioning expected in 2H 2014
EXHIBIT 28. CITRA PALUS RESERVES AND RESOURCES
Source: Company
EXHIBIT 29. BRMS HAS COW TO A 138,889 HECTARE MINING CONCESSION LOCATED IN CENTRAL AND SOUTH SULAWESI
Source: Company
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Konblo Bumi (Liberia)
94.1% ownedbyBRM (Subject to dilution to 80.0%)
Significant potential to discover world class diamond and gold depositsKonblo Bumi has seven exploration licenses to explore for gold, diamond and base metals (Two were awarded in 2009,
remaining five were awarded in January of 2010)
Current focus is on two diamond license areas located northwest of capital Monrovia and east of the town of Kakata
Helicopterborne magnetic survey has been completed
Survey located a number of areas that display features strongly indicative of Kimberlite pipes as large as 5 hectares
Licenses located in southern Liberia have excellent potential for economic gold discoveries
EXHIBIT 30. KONBLO BUMI (LIBERIA)
Source: Company
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(1,500)
(1,000)
(500)
0
500
1,000
1,500
2,0002,500
3,000
2009 2010 2011F 2012F 2013F
Rp bn
Revenue Equity in NNT net income
Interest expenses Corporate tax
Net Income (net of minority)
3149 171 196 226-
- -
628628
-- -
-
595
4592%
15% 383%76%
(10.0)
-
10.0
20.0
30.0
40.0
50.0
0
200
400
600800
1,000
1,200
1,400
1,600
2009A 2010A 2011F 2012F 2013F
Rp bn
Dairi Prima (LHS) Bumi Mauritania(LHS)
BUMI Japan (LHS) Revenues growth (RHS)
Financial Analysis
Income statement analysis
Solid revenue growth at 114% CAGR10-13F
We forecast consolidated revenue to grow at 114% CAGR 1013F from Rp149bn in FY10 to Rp1,449bn in FY13F due to: 1)
Bumi Mauritania starts to generate revenue since FY12F. 2) Dairi Primas revenue stream kicks in since FY13F. 3) growth in
Bumi Japan revenue.
EXHIBIT 31. CONSOLIDATED REVENUE AND REVENUE COMPOSITION
Source: Company, Mandiri Sekuritas estimates
Equity income from NNT is the biggest contributor to consolidated net income up to FY13F. Since NNT was acquiredby MDB in 2009, equity income from NNT is the biggest contributor to consolidated net income. We estimate that even
after Dairi produces at its normal capacity since FY14F, NNT is still the biggest contributor to consolidated net income. We
expect equity income from NNT would decrease in FY11F and FY12F compare to FY10 due to NNT is in the process of
development Batu Hijau phase 6 until the end of 2012. We estimate phase 6 starts to produce since FY13F, therefore its
sales volume in FY13F would back to reach its peak volume in 2010.
EXHIBIT 32. MAJOR COMPONENTS OF INCOME STATEMENT: EQUITY INCOME FROM NNT IS THE BIGGEST COMPONENT
Source: Company, Mandiri Sekuritas estimates
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Rp bn 2009 2010 2011 2012 2013
% MDB ownership in NNT at end of year 17% 24% 24% 24% 24%
INCOME STATEMENT
Equity in net income of NNT 488 2,132 1,231 1,462 2,615 Not taxable
Consolidated pre tax income 422 1,422 953 1,248 2,970
% contribution equity income to consol pre tax income 115% 150% 129% 117% 88%
Consolidated Income tax - 299 77 161 675
% effective corporate tax rate 0% 21.0% 8.1% 12.9% 22.7%
CASH FLOW STATEMENT
Dividend received from NNT - 1,583 439 522 2,037
% NNT dividend payout ratio 0% 78% 36% 36% 78%
% dividend received from NNT to consol pre tax income 0% 111% 46% 42% 69%
Taxable at
Corporate
tax rate
Effective Corporate Tax rate decrease from 21.0% in FY10 to 8.1% in FY11F and 12.9% in FY12F. Under Indonesian
Tax Regulation, corporate income tax is calculated on company basis, not on consolidated basis. Equity income from
associate company (in this case is equity income from NNT) is not taxable. Meanwhile, if ownership in associate company is
less than 25%, dividend receipt from associate company is taxable at corporate income tax rate. Therefore, if equity
income from associate is the biggest contributor to consolidated net income, effective corporate tax rate is determined bydividend payout ratio of the associate company. In BRMS case, the biggest contributor to consolidated pretax income is
contribution from NNT. We estimate NNT would reduce its dividend payout ratio from 78% in FY10 to 36% in FY11F and
FY12F due to NNT need cash to fund the development of phase 6 until the end of 2012. We estimate NNT would increase
its dividend payout ratio back to 78% in FY13F due to the phase 6 is expected to start production since FY13F.
EXHIBIT 33. EFFECTIVE CORPORATE TAX RATE DECREASE DUE TO DECREASE IN NNT DIVIDEND PAYOUT RATIO
Source: Mandiri Sekuritas
Earnings grows by CAGR10-13F of 33.2%. We estimate consolidated net income (net of minority interest) grow by
CAGR1013F of 33.2% from Rp765bn in FY10 to Rp1,806bn in FY13F. The main drivers of growth are: 1) NNT production in
FY13 is back to FY10 level after the development of phase 6 finish at the end of 2012. We expect consolidated net income
in FY11F and FY12F lower than FY10 because we expect NNT production decrease during the period. 2) BUMI Mauritania
start to generate earning since FY12F 3) Dairis earning kick in since FY13F.
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-13%
2%
13%
19%
7%
-20%
-10%
0%
10%
20%
2009 2010 2011F 2012F 2013F
Net gearing
0.1%
9.3%
4.2% 4.6%
9.4%
0.0%
4.3%3.5% 3.5%
7.1%
-2%
0%
2%
4%
6%
8%
10%
2009 2010 2011F 2012F 2013F
ROAE
ROAA
Balance sheet analysis
Healthier balance sheet ahead. The biggest chunk of BRMS debt is loan from Credit Suisse. We estimate BRMS balance
sheet would be healthier ahead as BRMS pays its loan from dividend receipt from NNT. We expect net gearing decrease
significant in FY13F before becoming net cash in FY14F as we assume NNT increase its dividend payment in FY13F as NNT
production increase significant after phase 6 starts to produce since FY13F.
EXHIBIT 34. HEALTHIER BALANCE SHEET AHEAD
Source: Company, Mandiri Sekuritas estimates
Increasing ROE and ROA would make trading at below par value become unjustified. Currently, BRMS is traded at far
below its book value. We think that increasing return on asset (ROA) and return on equity (ROE) would bring justification
for BRMS share to be traded above par value. Lower ROA and ROE in FY11F and FY12F compare to FY10 due to lower
equity income from NNT in FY11F and FY12F compare to FY10. Higher ROA and ROE in FY13F due to: 1) higher equityincome from NNT as its phase 6 start production. 2) Bumi Mauritania starts to generate earning since FY12F. 3) Dairi s
earnings kick in since FY13F.
EXHIBIT 35. ROAA AND ROAE
Source: Mandiri Sekuritas estimates
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Cash flow analysis (Rp bn) 2009 2010 2011F 2012F 2013F
Cash at beginning of the year 1 48 1,914 547 48
Cash flow from operation (151) (408) (457) 322 120
Cash flow from investing (14,696) (1,371) (1,739) (2,043) 1,374
Dividend from NNT - 1,583 439 522 2,037
Other Investing cash flows (14,696) (2,954) (2,179) (2,565) (663)
Cash flow from financing 14,894 3,644 830 1,222 (1,085)
Proceed from Dairi divestment - - - 2,166 -
Other financing cash flows 14,894 3,644 830 (945) (1,085)
Cash at end of the year 47 1,913 547 48 457
Cash flow analysis
Dividend from NNT is the major component of cash inflow. If we do not count oneoff cash inflows, such as: IPO
proceed and loan, dividend from NNT is the major component of cash inflow until FY13F. Cash flow from operation would
remain negative until FY12F and would start to be positive since FY13F.
EXHIBIT 36. DIVIDEND FROM NNT IS THE MAJOR COMPONENT OF CASH INFLOW
Source: Mandiri Sekuritas estimates
Risk Factors
We identify the flowing risk factors on BRMS:
1. The biggest contributor to consolidated net income and cash flow is NNT, meanwhile BRMS does not have
control on NNT. Although dividend from NNT is the main source of BRMS recurring cash inflow, BRMS does not
have ability to control NNTs dividend payout ratio. This may force BRMS to look for other source of fund for its
operating activities and required minimum dividend of US$4mn per annum to Daerah Maju Bersaing.
2. Commodity price fluctuation.Theprices of its commodities fluctuate from time to time. Significant fluctuation
from our forecast may generate different net income.
3. Regulation risk. Its exploration and development activities and future mining operations are regulated by the
Indonesian Government primarily through the Ministry of Energy and Mineral Resources, as well as the Ministry of
Forestry, the State Ministry for Environmental Affairs and the Investment Coordinating Board. Changes in
regulations may bring unfavorable impacts on BRMS.4. Fluctuations in the exchange rate would affect the forecasted net income and dividend received.
5. Increased operating costs could affect its profitability. A material increase in costs at any significant location
could have a significant effect on its profitability and operating cash flow.
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Appendix 1. Board of commissioners and Board of Directors
Name and Position Past Experience and Education
Saptari HoedajaPresident Commissioner Director of PT Bakrie & Brothers Tbk (2008 Present)President Commissioner of PT Energi Mega Persada Tbk (2007 Present)
President Commissioner of PT Kaltim Prima Coal (2007 Present)President Commissioner of PT Arutmin Indonesia (2007 Present)President Director of BUMI (2001)Degree in Mechanical Engineering of Bandung Institute of Technology (1983)
Nalinkant A. Rathod
Commissioner President Director of PT Kaltim Prima Coal and PT Arutmin Indonesia (2007 Present)Commisioner of PT. Bumi Resources Tbk and several Bakrie Group companies (2005 Present)Managing Director of Great Asian Holding Pte. Ltd. and Capital Managers Asia LtdBachelors Degree in Commerce from Andhra University in India (1970)Institute of Chartered Accountants of India (CPA) (1976)
Kanaka PuradiredjaIndependent Commissioner Honorary Chairman of the Board of Indonesian Institute of AccountantsManaging Partner and Chairman of KPMG Indonesia
Senior Partner of Kanaka Puradiredja, Suhartono, Office of Public AccountantChairman of Indonesian Institute of Audit CommitteeMember of the Honorary Board of the Association of Professionals in Risk ManagementVice Chairman of the Indonesian Institute of Commissioners and DirectorsDegree in Economic (Accounting) at Padjadjaran University, Bandung
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Name and Position Past Experience and Education
Kenneth P. Farrell
President Director Director of Bumi Resources (2003 Present)Director of IndoCoal Resources and PTNNTCommissioner of Arutmin, KPC, Indocoal Kalsel and Indocoal Kaltim (2007)
Management and Executives in BHP Billiton (1980 2001)Graduate in University of Queensland in Engineering (1976) and Commerce degree (1986)Gained Graduate Dip of Company Directorship from the University of New England (1994)
Yuanita Rohali
Director Finance Director of Bakrie Energy International Pte. LtdFinance Director of PT Bakrie & Brothers Tbk (2004 2009)lecturer at the Masters Program in Accounting at the University of IndonesiaBachelor degree in Computer Science from University of IndonesiaMasters in Management from University of Indonesia (1992)Master of Commerce in Advanced Finance from University of New South Wales, Sydney,Australia (1994)
Endang RuchijatDirector Chief Executive Officer of PT Kaltim Prima CoalSeveral senior positions in PT Bumi Resources Mining
Degree in Mining Engineering from Bandung Institute of Technology
Febriansyah Marzuki
Independent Director Corporate Finance Director of PT Capitalinc Investment (July 2009June 2010)Assistant Vice President Corporate Finance of PT Recapital SecuritiesSenior Manager of Finance Restyle ConceptFinance and Business Development Manager of PT Nusacipta RealtindoBachelor of General Business from University of Houston
Evan Ball
CEO Dairi Prima Minerals President Director of PT. Dairi Prima Minerals (2010 Present)Chief Executive Officer of Herald Resources (2008 Present)Managing Director of Kaltim Prima Coal with PT Bumi Resources (2003 2006)Senior Vice President Project Development di PT Bumi Resources Tbk.Chief Operating Officer of PT Kaltim Prima CoalManager Mining of Rio Tinto Coal AustraliaChief Engineer in Western Engineering Services - Kalgoorlie Gold Operations and Windarra
Herwin Wahyu Hidayat
Head of Investor Relations7 years experience in finance and Investor Relations within upstream oil & gas industriesCorporate Banker in ABN Amro (Global Corporate Group) and Citibank (Financial Institutions& Public Sector) (1998 2003)
Mohammad Sulthon
Corporate Secretary / Chief
Legal OfficerDirector of PT Multi Daerah BersaingSenior Legal Officer of PT Arutmin Indonesia for 5 yearsExpert in Indonesian mining law
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Initiating Coverage | 01 February 2012
Please see important disclosure at the back of this report Page 29 of 30
Bumi Resources Minerals
Balance sheet
YE Dec (Rp bn) 2009A 2010A 2011F 2012F 2013F
48 1,914 547 48 457Acc receivable 1 0 0 0 0
Inventory 0 0 0 0 0
Others 3 68 68 68 68
Current assets 52 1,982 615 115 525
Investments 0 0 0 0 0
Fixed assets 887 909 952 994 1,035
Others 14,301 17,205 20,113 23,556 24,735
Total assets 15,239 20,096 21,681 24,666 26,295
Current liabilities 42 295 330 1,219 2,105
Acc. payable 26 20 23 110 194
ST borrowings 0 79 82 21 0
Others 16 196 225 1,087 1,911
Longterm liabilities 15,413 2,648 3,357 4,403 2,887
Longterm payable 75 2,182 2,774 3,617 1,943
Others 15,338 466 583 786 944
Total liabilities 15,455 2,943 3,687 5,622 4,992
Shareholder's equity (216) 17,153 17,993 19,044 21,303
Cash and ST Investment
(incl. cash equiv)
Profit and loss
YE Dec (Rp bn) 2009A 2010A 2011F 2012F 2013F
Revenue 18 149 171 824 1,449
Gross profit 4 149 171 824 1,449
Operating profit 0 108 76 377 874
EBITDA 3 118 95 398 896
Net Interest (100) (1,074) (392) (591) (519)
Interest expense (100) (1,082) (478) (612) (537)
Interest income 0 7 86 21 18
Forex losses/gains 35 171 38 0 0
Net other 487 2,217 1,231 1,462 2,615
Pre-tax profit 422 1,422 953 1,248 2,970
Income tax (0) (299) (77) (161) (675)
Others (313) (36) 0 0 0
Minority interests (110) (322) (154) (273) (489)
Net Profit (0) 765 722 814 1,806 Cashflow statement
YE Dec (Rp bn) 2009A 2010A 2011F 2012F 2013F
Operating Profit 0 108 76 377 874
(101) (990) (392) (591) (519)
Depr & Amort 3 10 19 20 22
Tax (0) (299) (77) (161) (675)
Change in working capit 38 110 32 950 908
Other operating cash flo (192) (1,292) (1,231) (1,462) (2,615)
Operating Cash Flow (362) (2,675) (1 ,727) (1,140) (2,495)
Capital expenditure (8,664) (388) (2,116) (2,503) (601)
( 9,0 26 ) (3 ,0 62 ) ( 3,8 43 ) (3 ,64 2) (3 ,0 96)
Other investing cash flo (6,032) (984) 377 459 1,975
Cash Flow From
Investing (14,696) (1,371) (1,739) (2,043) 1,374
Net change in debts 75 2,187 595 782 (1,695)
Equity funds raised 0 11,267 0 0 0
Other financing cash flo 14,820 (9,808) 235 440 610
Cash Flow From
Financing 14,895 3,645 830 1,222 (1,085)
523 2,303 1,269 1,462 2,615
Net change in cash 47 1,866 (1,367) (500) 409
Cash at beginning 1 48 1,914 547 48
Cash at End 48 1,914 547 48 457
Other recurring income
/ (expenses)
Nonrecurring income(expenses)
Free Cash Flow
Valuation
YE Dec 2009A 2010A 2011F 2012F 2013F
PER (x) (2.2) 9.4 19.8 17.6 7.9
EV/EBITDA (X) 48.7 67.3 181.3 47.0 19.0
P/BV (X) (0.0) 0.4 0.8 0.8 0.7
P/CF (X) 0.2 9.3 19.3 17.2 7.8
Dividend Yield (%)
Source: Company, Mandiri Sekuritas estimates
Key ratios
YE Dec 2009A 2010A 2011F 2012F 2013F
Growth (% yoy)
Sales n/a 730.4 15.0 382.7 75.8
EBIT n/a 89,003.6 (30.0) 398.6 131.5
EBITDA n/a 4,270.7 (19.9) 319.8 125.1
Net Profit n/a N.A. (5.5) 12.7 121.9
Profitability (%) 0.0 0.0 0.0 0.0 0.0
Gross Profit Margin 24.4 100.0 100.0 100.0 100.0
Oper. Margin 0.7 72.9 44.3 45.8 60.3
EBITDA Margin 15.1 79.7 55.5 48.3 61.8
Net Margin (1.2) 514.9 423.0 98.7 124.6
ROAA (0.0) 4.3 3.5 3.5 7.1
ROAE 0.1 9.3 4.2 4.6 9.4
Leverage
Net debt/equity (%) (12.6) 2.0 12.8 18.9 7.0
EB ITDA/Gro ss Interest (X) 0.0 0.1 0.2 0.6 1.7
Per share data (Rp)
EPS (253) 60 28 32 71
CFPS 2,855 60 29 33 71
BVPS (384,555) 1,303 682 714 785
DPS
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Mandiri Sekuritas A subsidiary of PT Bank Mandiri (Persero) Tbk
Plaza Mandiri 28th Floor, Jl. Jend. Gatot Subroto Kav. 36 - 38, Jakarta 12190, IndonesiaGeneral: +62 21 526 3445, Fax : +62 21 527 5711 (Equity Research), +62 21 527 5374 (Equity Sales)
Verdi Budiman Head of Equity Research [email protected] +6221 5296 9542
Strategy, BankingAdrian Joezer Automotive, Consumer, Retail [email protected] +6221 5296 9549
Hariyanto Wijaya, CPA, CFA Conglomerate, Plantation, Heavy eq. [email protected] +6221 5296 9553
Herman Koeswanto Mining, Metals [email protected] +6221 5296 9543
Kresna Hutabarat Banking [email protected] +6221 5296 9548
Maria Renata Automotive, Construction, Toll road [email protected] +6221 5296 9546
Octavius Oky Prakarsa Building material, Consumer, Property [email protected] +6221 5296 9547
Raditya Christian Artono Oil & gas, Telecommunication [email protected] +6221 5296 9569
Villya Christin Purba Chemical [email protected] +6221 5296 9638
Aldian Taloputra Economist [email protected] +6221 5296 9572
Leo Putra Rinaldy Economist [email protected] +6221 5296 9406
Rafdi Prima Technical Analyst [email protected] +6221 5296 9551
Wisnu Trihatmojo Research Assistant [email protected] +6221 5296 9544
Lokman Lie Head of Sales, Trading & Dealing [email protected] +6221 527 5375
Silva Halim Head of Equity Sales [email protected] +6221 527 5375
Reinald Wangsanata Institutional Sales [email protected] +6221 527 5375
Oos Rosadi Institutional Sales [email protected] +6221 527 5375
Vera Ongyono Institutional Sales [email protected] +62 21 527 5375
Arvita Utami Ananda Institutional Sales [email protected] +62 21 527 5375
Andrew Handaya Institutional Sales [email protected] +62 21 527 5375Zahra Aldila Niode Institutional Sales [email protected] +62 21 527 5375
Kusnadi Widjaja Equity Dealing [email protected] +6221 527 5375
Edwin Setiadi Equity Dealing [email protected] +62 21 527 5375
Henry Sidarta Equity Dealing [email protected] +62 21 527 5375
Marhaendra Jakarta Branch [email protected] +6221 5296 9491
Yohanes Triyanto Kelapa Gading Branch [email protected] +6221 45845355
Hendra Riady Mangga Dua Branch [email protected] +6221 6230 2333
Meta Rama Prilyandari Pondok Indah Branch [email protected] +6221 75818837
Boy Triono Bandung Branch [email protected] +6222 2510738
Mochamad Jamil Banjarmasin Branch [email protected] +62511 442 4020
Irawan Endro Surono Malang & Surabaya Branch [email protected] +6231 535 7218
Ruwie Medan Branch [email protected] +6261 457 1116
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RESEARCH
INVESTMENT RATINGS: Indicators of expected total return (price appreciation plus dividend yield) within the 12month period from the date of the the last
published report, are: Buy (10% or higher), Neutral (10% to10%) and Sell (10% or lower).
DISCLAIMER: This report is issued by PT. Mandiri Sekuritas, a member of the Indonesia Stock Exchanges (IDX). Although the contents of this document may
represent the opinion of PT. Mandiri Sekuritas, deriving its judgement from materials and sources believed to be reliable, PT. Mandiri Sekuritas or any other
company in the Mandiri Group cannot guarantee its accuracy and completeness. PT. Mandiri Sekuritas or any other company in the Mandiri Group may be
involved in transactions contrary to any opinion herein to make markets, or have positions in the securities recommended herein. PT. Mandiri Sekuritas orany other company in the Mandiri Group may seek or will seek investment banking or other business relationships with the companies in this report. For
further information please contact our number 62215263445 or fax 62215275711.
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