Resource Alam Indonesia (KKGI IJ; BUY; TP IDR 7,500) Company update: Optimism
Builds up We are revising higher our TP on KKGI to IDR7,500 on the back of
stronger production volume. Our new TP offers a 29% price upside potential on
the stock’s still undemanding earnings multiples of 15.3-9.7x for FY11f-12f.
Stronger than expected delivery. After producing a total of 846k tonnes in
1Q11, our channel checks suggest that production for 2Q11 breached 1,206k
tonnes, bringing the total 6-month volume to 2,054k tonnes (58% of our initial
FY estimate). Considering the better weather ahead, we believe 2H11 production
should be even stronger. As such, we raise our production estimates for 2011f,
2012f and 2013f to 4.3m tonnes (+21%), 5.8m tonnes (+29%) and 7
