Sakari

Sakari: sector could see continued near term volatility, amid conflicting signals coming from the Indonesian govt on coal exports. Energy and Minerals Minister Jero Wacik said yday that Indonesia needed to conserve coal for domestic use, and so exports will “need to be controlled”. He gave no details on the scope or timeframe of any curbs. Nevertheless, Indonesia recently introduced a series regulations aimed at squeezing extra state revenue from the mining industry, incl limiting foreign ownership and a 20% tax on exports of unprocessed minerals. Any coal export curb is not likely to boost prices in the short term for a well supplied mkt, but could push up costs for the fuel in the long run as it would force Indonesia’s top coal buyers, India and China, to seek alternatives. Jero Wacik’s comments contrast against those from Thamrin Sihite, director general for coal and minerals, who signaled that Indonesia currently has no plan to curb coal exports but continues to consider possible changes in its coal policies with an eye to meeting growing domestic demand. Sihite spoke after the shares in Indonesian coal companies plummeted. Note the sharp decline in Sakari (-16%) and other Indonesian-listed coal stocks (-13%) yday. If investors concerns are assuaged, coal related plays could see a minor rebound today. Sakari trades at 6.9x P/E.