Straits Asia: We note that Bayan Resources (BYAN IJ) CEO forecasts a higher ASP of US$95-97/ton this year, from US$75.50/ton in 2010, and production to reach 15.5m tons from 11.9m tons partly due to better weather conditions. Adverse weather last year hampered nearly all coal miners in Indonesia...
Readthrough is positive for Straits Asia, which recorded a similar FY10 ASP of US$72.81/ton, and saw improvement in 1Q11 to ASP of US$82.16/ton. There is still an additional ~15-18% upside in ASP, if Straits Asia keeps up with Bayan’s forecast, and this is possible with Straits Asia targeting 50% of its pdtn to be linked to index prices (vs fixed sales previously)...
Straits Asia’s receipt of the final license to commence mining at the Northern Lease of its Sebuku mine is timely, and paves the way for Straits Asia to take advantage of better weather to boost pdtn.
Stock +2.3% at $3.15
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