Sakari: UBS cuts TP to $2.55 from $3.70 after lowering its FY12-14 earnings estimates by 31%-38% on lower 2012 coal price and production estimates and raising fuel-cost estimates.
The house cuts its 2012 Japan benchmark thermal coal forecast to US$115/ton from US$125/ton on spot-price weakness. Also lowers Sakari's production forecast from its Jembayan mine as equipment capacity will need to be upgraded to reach maximum capacity; UBS previously expected production capacity could be met with existing equipment and it expects the replacement will take about 12 months. Also lowers its Sebuku mine production forecast as management notes the pit size is smaller than originally expected.
The house keeps its Buy rating , but removes Sakari as its top pick after its outperformance this year.
The stock is up 1.9% at $2.14, up 16.3% ytd.
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