PT Alamtri Resources Indonesia Tbk · IDX:ADRO
PT Alamtri Resources Indonesia Tbk — PT Adaro Energy — Investor Presentation (May 2017)
34 slides from PT Alamtri Resources Indonesia Tbk's investor presentation, May 2017
Slide 1: Delivering Energy to Build the Nation
DELIVERING ENERGY TO BUILD THE NATION May 2017 www.adaro.com
Slide 2: Disclaimer
Disclaimer These materials have been prepared by PT Adaro Energy (the “Company”) and have not been independently verified. No representation or warranty, expressed or implied, is made and no reliance should be placed on the accuracy, fairness or completeness of the information presented or contained
Slide 3: Key questions
Key questions: • What is the outlook for coal supply and demand? • How has Adaro performed? • What is Adaro’s strategy and future plan? 3
Slide 4: Supply response is apparent
Supply response is apparent Coal Production (Mt) • China coal production declined ~10% in 2016, 2,500 -10% due to: 2,000 FY15 FY16 − Reduction of working days to 276 days from 330 days. 1,500 • China is expected to cut up to 1 Bt of excess capacity by 2020. 1,000 • China’s coal supply cut should con
Slide 5: Coal price gaining back momentum
Coal price gaining back momentum 120 750 110 700 100 650 90 600 RMB US$ 80 550 70 500 60 450 50 400 40 350 30 300 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Global Coal Newcastle (US$) QHD 5500 NAR (RMB) • China’s sup
Slide 6: Long term coal demand outlook remains robust
Long term coal demand outlook remains robust… Seaborne coal demand by country (Mt) Japan, Korea, Taiwan Source: WoodMackenzie • China’s share in seaborne market to decline. • Increased potential from Southeast Asia, North Asia, and India. • Electrification in the developing world continues to drive
Slide 7: ...especially from Southeast Asia
…especially from Southeast Asia Coal capacity additions inSoutheast Asia per annum Southeast Asia coal demand Total 600 Mt Total 73 360 Mt Total 259 214 Mt 97 80 132 268 78 131 56 2013 2020 2030 Domestic Consumption (Non-Indonesia) Source: WoodMackenzie Energy Market Service Domestic Consumption (In
Slide 8: Quick look on Indonesia
Quick look on Indonesia Indonesia’s Coal Sales (Mt) 160 • While Indonesia’s coal production in 2016 was relatively flat y-o-y and its export decreased ~2% y- 120 o-y… 80 • …domestic coal demand in 2016 increased ~11% y- 40 o-y. 0 Export Domestic FY15 FY16 Indonesia’s Electricity Generation by Source
Slide 9: Where will the supply come from?
Where will the supply come from? Seaborne coal supply by country (Mt) Source: WoodMackenzie Energy Market Service • Along with the improvement of Indonesia’s domestic demand, its share in the seaborne market will fall. • Higher coal price is required to encourage production from Australia. 9
Slide 10: Will there be enough coal from Indonesia?
Indonesia is a major supplier to the global seaborne thermal coal market, but will there be enough coal from Indonesia? 10
Slide 11: Indonesia has to prioritize domestic demand
With significant power projects in the pipeline, Indonesia has to prioritize domestic demand Indonesia Coal Production and Coal Reserves (projected) 12,000 450 400 10,000 350 Coal Production (Mt) 8,000 300 Coal Reserves (Mt) 250 6,000 200 4,000 150 100 2,000 50 - - 2010 2015 2020 2025 2030 2035 2040
Slide 12: Performance of Adaro Energy
Performance of Adaro Energy 12
Slide 13: Resilient operational and financial results
Resilient operational and financial results OPERATIONAL 1Q17 1Q16 % Change Production (Mt) 11.86 12.64 -6% Sales (Mt) 12.03 13.47 -11% OB removal (Mbcm) 54.76 53.58 2% FINANCIAL (US$ millions, unless indicated) 1Q17 1Q16 % Change Net Revenue 727 586 24% Core Earnings 132 81 63% Operational EBITDA 27
Slide 14: Solid balance sheet and strong cash generation
Solid balance sheet and strong cash generation Net Debt Position and Leverage Ratios Cash and Free Cash Flow (million US$) 1200 2,500 2.0 1000 2,000 1.6 800 1,500 1.2 600 1,000 0.8 400 500 0.4 200 - - 0 2012 2013 2014 2015 2016 1Q17 2012 2013 2014 2015 2016 Net Debt (million US$) Net Debt to Equity
Slide 15: Cost control – key in delivering strong performance
Cost control – key in delivering strong performance Adaro’s Estimated Coal Cash Cost Breakdown (1Q17) Operational EBITDA Margin Fixed overhead, 40% 5% Mining, Coal 35% - 40% 35% processing, 30% 10% 25% 20% Freight & 15% handling, 20% 10% 5% 0% PTBA Kideco ITMG Adaro Shenhua Fuel, 25% - 30% Source: B
Slide 16: Delivering return to shareholder
Delivering return to shareholder 150 60% 50% 120 40% 90 30% 60 20% 30 10% 0 0% 2012 2013 2014 2015 2016 Dividend (million US$) Payout Ratio • Adaro has continued to pay dividend through the cyclical downturn. • Although we have no fix dividend payout ratio, but since our IPO in 2008, our average div
Slide 17: Snapshot of Adaro Energy
Snapshot of Adaro Energy 17
Slide 18: Who is Adaro Energy?
Who is Adaro Energy? • Among the largest single-concession coal 2014A: 56.2 Mt producers in the southern hemisphere. Production 2015A: 51.5 Mt 2016A: 52.6 Mt • Top 5 thermal coal exporter globally. Sub-bituminous, medium calorific value, • Major supplier to Indonesia’s domestic markets. Envi
Slide 19: Business model that creates sustainable value
Business model that creates sustainable value Three pillars of growth integrating pit-to-power PT Adaro Energy, Tbk (AE) Coal Mining Assets Mining Services and Logistics Power Adaro Indonesia (AI) 88.5% Maritim Barito 100% Saptaindra Sejati (SIS) 100% Makmur Sejahtera Wisesa 100% Coal mining, S Kali
Slide 20: Adaro Coal Mining
Adaro Coal Mining 20
Slide 21: Diversified Coal Assets Across Indonesia
Diversified Coal Assets Across Indonesia 5 Deepening Coal Product Portfolio and Set to Capitalize Assets to Support Indonesia’s Development 6 1 2 3 4 Adaro has more than 12 billion tonnes (Bt) of coal resources (including option to acquire 7.9 Bt) and 1.2 Bt of coal reserves. 1 2 3 4 5 6 Adaro Indon
Slide 22: Over Two Decades of Solid Production Performance
Over Two Decades of Solid Production Performance 60 350 2017 2016 2015 Units Guidance Actual Actual 300 50 Production volume Mt 52 - 54 52.5 51.5 Strip ratio bcm/tonne 4.85 4.45 5.19 250 Overburden removal (Mbcm) 40 Production (Mt) 200 30 150 20 100 10 50 0 0 1992 1993 1994 1995 1996 1997 1998 1999
Slide 23: Strong Customer Base with Focus on Domestic Market
Strong Customer Base with Focus on Domestic Market Customer type by % volume (1Q17) Geographical breakdown of customers (1Q17) Spain, 3% China, 2% Others, 5% 10% Philippines, 3% Indonesia, 30% India, 5% Power Taiwan, 6% Hong Kong, 6% Others Japan, South 90% 12% Malaysia, Korea, 15% 13% * Others incl
Slide 24: Adaro's Metallurgical Coal Asset
Adaro’s Metallurgical Coal Asset Adaro MetCoal Companies (AMC) in Central and East Kalimantan • Adaro Energy completed the acquisition of AMC from BHP Billiton for 7 CCOW’s in Central and East Kalimantan. • The transaction value was $120 million for 75% of the properties. Adaro now owns 100% of the
Slide 25: Adaro Mining Services and Logistics
Adaro Mining Services and Logistics 25
Slide 26: Ensuring operational excellence
Ensuring operational excellence Strengthens Adaro’s Earnings Profile as Contribution to Parent Co Increases • Key part of our vertical integration. • Ensures operational excellence, productivity improvement and timely reliable delivery to customers. • Non coal mining business accounted for 31% of Ad
Slide 27: Highlights of mining services and logistics
Highlights of mining services and logistics Name Information PT Saptaindra Sejati (SIS) • One of Indonesia’s leading mining contractors. • Owns more than 1,500 heavy equipment. • 1Q17 overburden removal volume: 39.96 Mbcm. • 1Q17 coal production volume: 7.51 Mt. PT Maritim Barito Perkasa (MBP) • Bar
Slide 28: Adaro Power
Adaro Power MSW’s 2x30 MW mine-mouth power plant in Tanjung, South Kalimantan 28
Slide 29: Building our future through Adaro Power
Building our future through Adaro Power Indonesia's Additional Electricity Generation Capacity (MW) 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Total Coal-fired 3,027 1,024 3,397 17,175 4,548 1,781 400 700 500 2,250 34,802 Others 1,113 3,463 9,041 4,223 1,325 1,184 2,416 3,698 7,918 11,357 45,
Slide 30: Adaro's First IPP: Central Java Power Project
Adaro’s First IPP: Central Java Power Project Reached financial close and has started construction Bhimasena Power Indonesia Capacity 2x1000 MW Stake Acquired 34% Partner(s) J-Power (34%), Itochu (32%) Location Central Java • Signed 25 years PPA with PLN • Total Capex: US$4.2 billion Development Pro
Slide 31: Pipeline of power project
Pipeline of power project Diversify and secure predictable long-term coal demand Tanjung Power Indonesia Capacity 2x100 MW Stake Acquired 65% Partner(s) Korea EWP (35%) Location South Kalimantan • Signed PPA with PLN • Total Capex: $545 million Development Progress • Concluded financing close in Jan
Slide 32: Adaro Energy guidance for 2017
Adaro Energy guidance for 2017 Coal Production (Mt) Consolidated Planned Strip Ratio (bcm/t) 7 56.2 5.6 5.7 52 - 54 5.2 4.85 52.3 51.5 52.5 4.5 47.2 2012A 2013A 2014A 2015A 2016A 2017F 2012A 2013A 2014A 2015A 2016A 2017F Capital Expenditure (US$ million) Operational EBITDA (US$ billions) 490 1.1 0.9
Slide 33: Conclusions and takeaways
Conclusions and takeaways • Coal market is moving in positive direction towards supply and demand balance. • China’s supply reform has provided the much-needed support for coal market. • Indonesia to lessen coal export and focus on the domestic market. • Long term fundamental for coal remains promis
Slide 34: Thank You
THANK YOU www.adaro.com This presentation is also available at www.adaro.com/investing/investor-presentations-and-events-calendar/