Friday, May 20, 2011

Straits Asia/Indonesian Coal

Straits Asia/Indonesian Coal: Citi raises its thermal coal forecasts to average US$123/t and US$109/t from US$108/t and US$93/t, respectively, for 2012-13E on back of expected rise in thermal coal’s share of electricity generating capacity in Japan and significant import demand from China. House are raising estimates across its coverage to factor in the revised price forecasts…..

Add that the Indonesia coal sector trades at a mean 12mth forward P/E and EV/EBITDA multiple despite the current coal price up-cycle. In comparison, in previous up-cycles the sector’s valuations overshot to 2 standard deviations above mean. House believe the sector’s earnings recovery, after 3Q of earnings disappointment in FY10, will lead to the sector’s re-rating.

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