Friday, June 22, 2012
Sakari: DMG says the slump in share price presents buying opportunity. SAR’s share price has declined 51% from its end Feb 12 peak due to (1) declining coal prices, (2) poor results, (3) negative regulatory news from Indo, and (4) weak economic sentiment. The house believes most of the negatives have been priced in, with coal prices possibly seeing limited downside from current levels (Newcastle at US$84/mt). Lowers FY12 coal ASP to US$102/mt from US$113/mt previously, and cuts FY12 net profit by 33% to US$119m, but believes catalysts for share price upside may come from rising coal prices as well as stronger results in 2H12. Maintains Buy with lower TP of $2.00 (from $2.50 previously) on 15.5x FY12 P/E, in line with its 3 yrs avg. Sees the stock supported by 6% div yield. The stock is +3.8% at $1.355, recovering strongly from its intraday low at $1.265.