Sakari

Sakari: Macquarie reiterates O/p, TP $3.80, after cite visit. House note that Sakari is a preferred play in the ASEAN coal space (5.0x FY12E P/E), given the strength at Sebuku, due to higher coal prices and better product mix at Sebuku..

Trims 2011E/2012E EPS by 4-7% predominantly on the back of lower Jembayan production forecasts; however this is largely offset by increasing Sebuku’s (higher margin) 2012 production from 2.5mt to 3mt.

Similarly, IIFL Reiterate Buy Call with TP $3.25. Note that limited execution risk in SAR achieving 13% CAGR in coal production over 2011-13. The profitability of Sebuku’s Northern Leases is twice that of Jembayan and hence, ramp up of production at Sebuku’s Northern Leases will improve SAR’s profitability over the next few years.

Co. may hold back production growth at Jembayan if coal demand and prices weaken in the near-term, to focus on improving its operating efficiency; however, this would be offset by ramp up at Sebuku. Expect SAR to deliver 54% EPS CAGR over 2010-13