EQUITY RESEARCH

ADRO - Result update - 01 November 2024

CIPTADANA SEKURITAS ASIA

BUY Adaro Energy

Solid 3Q24 performance, led to in line 9M24 result
TP: Rp4,300 (+18.8%)

Sector Coal 3Q24 profit holds at USD 404.2 mn due to cost reductions and other income
Adaro Energy (ADRO) reported a net profit of USD 404.2 mn for 3Q24, representing a slight
Bloomberg Ticker ADRO IJ
decrease of 0.1% QoQ/17.1%YoY. Revenue fell 3.3% QoQ and 1.5% YoY to USD 1.4 bn, as
Share Price Performance
higher production volumes were unable to offset the decline in coal ASP, which decreased
by 8.2% QoQ/ 15.0% YoY. Cost of sales decreased by 2.1% QoQ and 3.2% YoY, supported by
Last price (Rp) 3,620 a reduction in cash costs by 8.5% QoQ/17.1% YoY. This led to a slight narrowing of the
Avg. daily T/O (Rpbn/USDmn) 198.8/12.7 GPM, down by 80 bps to 37.1%. Operating expenses rose by 7.2% QoQ but declined 17.1%
YoY, compressing the OPM by 130 bps to 32.0%. Below the operating line, a 97.7%
3m 6m 12m
increase in other income provided additional support to profitability.
Absolute (%) 9.0 27.0 48.4
Relative to JCI (%) 5.4 20.9 37.0 9M24 result in line with expectation
Cumulatively, the company posted a net profit of USD 1.1 bn, down 3.0% YoY, aligning with
52w High/Low price (Rp) 4,050/2,320
our estimates but exceeding consensus FY24 expectations at 77.8% and 92.1%,
respectively. Revenues declined by 10.6% YoY to USD 4.4 bn, driven by a decrease in coal
4,500 40% ASP (-19.9%), achieving 75.5% of our FY24F target. While the cost of sales fell by 10.0%
4,000 30% YoY, it was insufficient to offset the revenue decline, resulting in a gross profit decrease of
3,500 11.6% to USD 1.7 bn. On the opex side, despite a reduction of 23.3%, operating profit
20%
3,000
decreased by 9.3% to USD 1.5 bn, reaching 74.9% of our FY24F. Other income more than
2,500 10%
doubled to USD 124.7 mn, further strengthens profitability.
2,000 0%
1,500
-10% Update on KAI and power
1,000
-20% In 3Q24, the planned construction of the company’s aluminum smelter progressed as
500
0 -30%
scheduled, with notable advancements in steel structure erection, jetty area development,
and conveyor construction. A key milestone during this period was the successful
Oct-23

Apr -24

Oct-24
Nov-23
Dec-23

May-24

Aug -24
Sep -24
Jan-24

Mar-24

Jun-24
Jul-24
Feb-24

operation of heavy and general cargo, alongside the installation of a gantry crane. In the
power sector, Adaro's plants also demonstrated strong performance, with Makmur
ADRO 1yr Rel . to JCI (RHS )
Sejahtera Wisesa (MSW) achieving an average availability factor of 85.2% in 3Q24,
Outstanding shrs (mn) 31,986 primarily due to planned maintenance, and an average of 90.6% for 9M24. Tanjung Power
Indonesia (TPI) reported an impressive availability factor of 99.5% in 3Q24, with a 9M24
Mkt. Cap (Rpbn/USDmn) 115,789/7,376
average of 93.1%. Conversely, Bhimasena Power Indonesia (BPI) recorded an availability
Estimated free float (%) 40.6 factor of 69.5% for the quarter, resulting in an 84.5% year-to-date figure, impacted by
Major shareholders planned maintenance that extended from 2Q24 to August 2024.

Adaro Strategic 43.9% Maintain buy rating with unchanged TP of Rp4,300/share

Thohir Garibaldi 6.2% Following in-line 9M24 results, we maintained our earnings forecast and TP of
Rp4,300/share on ADRO, which is derived from a FY25F PE multiple of 5.3x. We maintain
our Buy recommendation on ADRO as our TP still offers an attractive 18.8% upside to
current share price. We continue to like ADRO, with the company having ample reserve
EPS Consensus
life, diverse portfolio, an integrated mining system and an attractive FY25F dividend yield
Ciptadana Cons. % Diff of 10.1%. Potential downside to our call: 1) Thermal and met coal price volatility 2)
2024F 4.8 3.9 21.9 Government policy changes resulting in higher tax rate and royalties 3) Aluminum project
delay 4) MIP implementation.
2025F 5.2 3.4 53.0
2026F 4.0 3.2 25.2 Exhibit 1 : Financial Highlights
Year to 31 Dec 2022A 2023A 2024F 2025F 2026F
Revenue (USDmn) 8,102 6,518 5,897 5,977 5,288
Operating profit (USDmn) 4,277 2,193 2,006 2,169 1,620
Net profit (USDmn) 2,493 1,641 1,521 1,664 1,282
EPS (US$Cents) 7.8 5.1 4.8 5.2 4.0
EPS growth (%) 167.1 -34.2 -7.3 9.4 -23.0
Thomas Radityo EV/EBITDA (x) 1.0 2.5 2.6 2.0 2.4
+62 21 2557 4800 Ext.795 PER (x) 3.0 4.7 5.2 4.6 6.1
radityothomas@ciptadana.com PBV (x) 1.2 1.1 1.1 0.9 0.9
Dividend yield (%) 8.7 12.9 11.2 10.9 10.3

http://www.ciptadana.com ROE (%) 41.4 24.2 20.5 20.2 14.7

Source : ADRO, Ciptadana Estimates

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 EQUITY RESEARCH
ADRO - Result update - 01 November 2024
CIPTADANA SEKURITAS ASIA

Exhibit 2: Financial exhibit

(USD mn) 3Q24 2Q24 3Q23 QoQ YoY 9M24 9M23 YoY FY24F 9M/24F
Revenue 1478.8 1530.0 1501.8 -3.3% -1.5% 4,451.7 4981.1 -10.6% 5,897 75.5%
Cost of sales -929.9 -950.0 -960.2 -2.1% -3.2% -2,695.0 -2993.3 -10.0%
Gross Profit 549.0 580.0 541.6 -5.4% 1.4% 1,756.7 1,987.8 -11.6%
Gross Margin 37.1% 37.9% 36.1% -0.8% 1.1% 39.5% 39.9% -0.4%

Operating Expenses -76.1 -71.0 -91.8 7.2% -17.1% -255.1 -332.4 -23.3%
Operating Profit 472.9 509.0 449.8 -7.1% 5.1% 1501.6 1655.4 -9.3% 2,006 74.9%
Operating Margin 32.0% 33.3% 30.0% -1.3% 2.0% 33.7% 33.2% 0.5%

Other Income (Expenses) 74.3 37.6 20.0 97.7% n/a 124.7 54.8 127.5%

Pre-tax Profit 547.2 546.6 469.9 0.1% 16.4% 1,626.3 1710.2 -4.9%
Tax -101.7 -92.5 -88.0 9.9% 15.5% -300.6 -332.3 -9.5%

Profit Before MI 445.5 454.1 381.9 -1.9% 16.7% 1,325.7 1,377.8 -3.8%
Minority Interest 41.3 49.7 36.8 -16.7% 12.3% 142.8 158.9 -10.2%
Net Profit/loss 404.2 404.4 345.1 -0.1% 17.1% ###### 1,218.9 -3.0% 1,521 77.8%
Net Margin 27.3% 26.4% 23.0% 0.9% 4.4% 26.6% 24.5% 2.1%

Source : ADRO, Ciptadana Estimates

Exhibit 3: Operational exhibit

Operational 3Q24 2Q24 3Q23 QoQ YoY 9M24 9M23 YoY FY24F 9M/24F
Coal production (mn tons) 19.8 17.7 17.3 12.3% 14.6% 55.6 50.7 9.5% 66.5 83.5%
Coal sales (mn tons) 18.7 18.5 16.5 1.4% 13.5% 53.7 49.1 9.2% 66.5 80.6%
Coal ASP (USD/ton) 75.2 81.9 88.4 -8.2% -15.0% 78.9 98.5 -19.9% 84.5 93.4%
Cash Cost (USD/ton) 42.7 46.6 51.4 -8.5% -17.1% 44.1 54.7 -19.3% 46.6 94.8%
OB removal (mbcm) 93.3 75.4 87.6 23.8% 6.5% 234.9 129.8 80.9% 232.7 100.9%

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 EQUITY RESEARCH
ADRO - Result update - 01 November 2024
CIPTADANA SEKURITAS ASIA

Exhibit 4: ESG assessment

Company description Mining Company

Environmental
1. The company conserves flora and fauna by rehabilitating the
watershed area.
2. ADRO is managing mining water and storm water runoffs in
settling ponds, ensuring that they meet the quality standards
before releasing them into the body of water.
3. ADRO manages hazardous chemical waste (B3) by storing it in
an authorized landfill before being transported and disposed of
by an approved third party.
4. Mining involves heavy machinery use, road construction, and the
upheaval of rock structures. Subsequently, the ecology of a
mining area is often damaged or destroyed during and after use.
5. The company is currently developing methods of power
generation beyond coal, with its planned Kelanis project solar
powered project expansion and purported hydrogen power
project.

Social
1. Establishing Adaro Zero Accident Mindset (AZAM) policy at every
business unit to strengthen the safety culture in ADRO group to
minimize occupational health and safety hazards.
2. The company possesses an impeccable health and safety track
ESG-related record.
opportunity or risk 3. ADRO formed a crisis management team to combat the COVID-
assessment 19 epidemic
4. ADRO ignites Education (AIC) aims to educate and improve
human resources by integrating knowledge, skills and character
development.

Government
1. ADRO is committed to consistently implementing Good
Corporate Governance (GCG) by upholding transparency,
accountability responsibility and fairness in all of its business
process and activities.
2. ADRO has a BB rating from MSCI environmental, Social and
Governance (ESG) rating.

Source: ADRO, Ciptadana estimates

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 EQUITY RESEARCH
ADRO - Result update - 01 November 2024
CIPTADANA SEKURITAS ASIA

Exhibit 5 - Income Statement

Year to 31 Dec (USDmn) 2022A 2023A 2024F 2025F 2026F
Revenue 8,102 6,518 5,897 5,977 5,288
COGS -3,449 -3,980 -3,460 -3,353 -3,207
Gross profit 4,653 2,537 2,437 2,624 2,081
Oper. expenses -375 -344 -431 -455 -461
Oper. profit 4,277 2,193 2,006 2,169 1,620
EBITDA 4,755 2,335 2,251 2,493 1,982
Interest income 48 140 116 108 129
Interest expense -89 -109 -89 -48 -46
Other income (exp.) 240 70 60 60 60
Pre-tax profit 4,476 2,294 2,093 2,289 1,764
Income tax -1,645 -439 -439 -481 -370
Minority interest -338 -213 -132 -145 -111
Net profit 2,493 1,641 1,521 1,664 1,282

Exhibit 6 - Balance Sheet

Year to 31 Dec (USDmn) 2022A 2023A 2024F 2025F 2026F
Cash & cash equivalent 4,172 3,360 3,147 3,743 4,071
Acct, receivables 647 525 703 713 631
Inventory 199 171 242 246 217
Other curr, asset 301 247 135 137 120
Total current asset 5,319 4,302 4,228 4,839 5,039
Fixed assets - net 2,485 2,749 3,459 3,809 4,038
Other non-curr.asset 1,700 2,058 1,976 1,977 1,970
Total asset 10,782 10,472 11,026 11,989 12,411

ST debt + curr. maturity 175 252 69 59 49

Acct, payable 333 345 474 459 439
Advances received 0 0 0 0 0
Other curr. liab 1,939 842 818 822 726
Long term debt 1,407 1,188 1,008 1,017 976
Other non-curr, liab, 401 438 483 485 479
Total liabilities 4,255 3,064 2,851 2,841 2,669
Shareholder equity 6,025 6,772 7,407 8,234 8,717
Minority interest 503 636 768 913 1,024
Total liab + SHE 10,782 10,472 11,026 11,989 12,411

Exhibit 7 - Per Share Data

(US$Cents) 2022A 2023A 2024F 2025F 2026F
EPS 7.8 5.1 4.8 5.2 4.0
BVPS 0.2 0.2 0.2 0.3 0.3
DPS 2.0 3.1 2.8 2.6 2.5
FCF per share 0.1 0.0 0.0 0.0 0.0

Source : ADRO, Ciptadana Estimates

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 EQUITY RESEARCH
ADRO - Result update - 01 November 2024
CIPTADANA SEKURITAS ASIA

Exhibit 8 - Cash Flow

Year to 31 Dec (USDmn) 2022A 2023A 2024F 2025F 2026F
Net income 2,493 1,641 1,521 1,664 1,282
Depreciation 478 142 245 324 362
Chg in working cap. 957 -821 -32 -27 12
Other 67 -179 259 146 112
CF-Oper activities 3,995 783 1,992 2,107 1,769

Capital expenditure -349 -406 -955 -674 -591

Others -739 -101 0 0 0
CF-Investing activities -1,088 -506 -955 -674 -591

Net change in debt -45 -139 -363 -1 -51

Net change in equity 0 0 0 0 0
Dividend payment -650 -1,000 -886 -837 -799
Other financing 45 106 0 0 0
CF-Financing activities -651 -1,033 -1,249 -837 -850

Net cash flow 2,256 -756 -212 596 328

Cash - begin of the year 1,811 4,067 3,311 3,099 3,695
Cash - end of the year 4,067 3,311 3,099 3,695 4,023

Exhibit 9 - Key Ratios

Year to 31 Dec 2022A 2023A 2024F 2025F 2026F
Growth
Revenue (%) 102.9 -19.6 -9.5 1.4 -11.5
Operating profit (%) 169.9 -48.7 -8.5 8.1 -25.3
Net profit (%) 167.1 -34.2 -7.3 9.4 -23.0
Profitability Ratios
Gross margin (%) 57.4 38.9 41.3 43.9 39.3
Operating margin (%) 52.8 33.7 34.0 36.3 30.6
EBITDA margin (%) 58.7 35.8 38.2 41.7 37.5
Net margin (%) 30.8 25.2 25.8 27.8 24.2
ROA (%) 23.1 15.7 13.8 13.9 10.3
ROE (%) 41.4 24.2 20.5 20.2 14.7
Liquidity Ratios
Current ratio (x) 2.2 3.0 3.1 3.6 4.1
Quick ratio (x) 2.1 2.9 2.9 3.4 4.0
Cash conversion cycle (days) 32.3 29.5 38.2 41.5 40.1
Activity Ratio
Inventory turnover (days) 21.1 15.7 25.6 26.7 24.7
Receivable turnover (days) 24.8 32.8 38.0 43.2 46.4
Payable turnover (days) 13.6 19.0 25.3 28.5 31.0
Solvency Ratio
Interest cover (x) 53.2 21.3 25.2 51.6 43.2
Debt to equity ratio (x) 0.3 0.2 0.1 0.1 0.1
Net debt to equity (x) Net Cash Net Cash Net Cash Net Cash Net Cash

Source : ADRO, Ciptadana Estimates

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 EQUITY RESEARCH
ADRO - Result update - 01 November 2024
CIPTADANA SEKURITAS ASIA

EQUITY RESEARCH

HEAD OF RESEARCH ECONOMIST ANALYST

Arief Budiman Renno Prawira Erni Marsella Siahaan, CFA
Strategy, Automotive, Heavy Equipment, Economist Banking, Hospital
Construction, Oil & Gas and Shipping T +62 21 2557 4800 ext 735 T +62 21 2557 4800 ext 919
T +62 21 2557 4800 ext 819 E prawirarenno@ciptadana.com E siahaanerni@ciptadana.com
E budimanarief@ciptadana.com

ANALYST ANALYST ANALYST

Yasmin Soulisa Gani Thomas Radityo
Property, Plantations Telco, Tower, Media, Technology Coal, Metal Mining
T +62 21 2557 4800 ext 799 T +62 21 2557 4800 ext 734 T +62 21 2557 4800 ext 795
E soulisayasmin@ciptadana.com E gani@ciptadana.com E radityothomas@ciptadana.com

ANALYST ANALYST ANALYST

Putu Chantika Putri Muhammad Gibran Alif Ihsanario
Consumer, Cigarette Cement, Poultry, Toll road Retail, Pharmaceutical
T +62 21 2557 4800 ext 740 T +62 21 2557 4800 ext 798 T +62 21 2557 4800 ext 760
E putriputu@ciptadana.com E gibranmuhammad@ciptadana.com E ihsanarioalif@ciptadana.com

TECHNICAL ANALYST RESEARCH ASSISTANT

Asrul Husni Sumarni
T +62 21 2557 4800 ext 780 T +62 21 2557 4800 ext 920
E husniasrul@ciptadana.com E sumarni@ciptadana.com

EQUITY SALES

HEAD OF INSTITUTIONAL EQUITY SALES HEAD OF EQUITY SALES

Dadang Mulyana Maureen Natalia
Plaza ASIA Office Park unit 2 Plaza ASIA Office Park unit 2
Jl. Jend. Sudirman Kav. 59 Jl. Jend. Sudirman Kav. 59
Jakarta - 12190 Jakarta - 12190
T +62 21 2557 4800 ext 838 T +62 21 2557 4800 ext 997
F +62 21 2557 4900 F +62 21 2557 4900
E mulyanadadang@ciptadana.com E nataliamaureen@ciptadana.com

BRANCH OFFICES

JAKARTA - MANGGA DUA SURABAYA

Komplek Harco Mangga Dua Intiland Tower Surabaya
Rukan Blok C No.10 Ground Floor Suite 5 & 6
Jl. Mangga Dua Raya Jl. Panglima Sudirman 101-103
Jakarta - 10730 Surabaya - 60271
T +62 21 600 2850 T +62 31 534 3938
F +62 21 612 1049 F +62 31 534 3886

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 EQUITY RESEARCH
ADRO - Result update - 01 November 2024
CIPTADANA SEKURITAS ASIA

Analyst Certification

Each contributor to this report hereby certifies that all the views expressed accurately reflect his or her personal views about the
companies, securities and all pertinent variables. It is also certified that the views and recommendations contained in this report are not
and will not be influenced by any part or all of his or her compensation.

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