Initiation Report

www.arthasekuritas.com 29 April 2020

Aneka Tambang (ANTM IJ): A Brief Upheaval

We initiate BUY for Aneka Tambang (ANTM IJ) with target price of Rp630,

BUY
reflecting forward PBV 20F of 0.73x (21F: 0.70x) and PER 2020F of 29.2x (21F:
15.3x). We believe current price is well below fair price despite profitability is
forecasted to decrease temporarily in 2020 along with the decline in nickel price
to US$12,500 per TNi. Nonetheless, we anticipate recovery in 2021 backed by
1YR Target Price : Rp630 rebound in nickel demand which made current price to be the best entry point.
Last Price : Rp492 ANTM capital structure remains strong despite slight increase in DER to 0.51x
Upside/Downside : +28.0% in 20F due to high capex and funding for bond & loan payments of Rp6.89 tn.
Diversified metal mining company. ANTM is a diversified metal mining company
Company Profile engaged mainly in gold (9M19 sales proportion: 69.4%), nickel (24.9%), and others
(www.antam.com) (5.0%). ANTM’s involved in upstream and downstream business, where in 2018 gold
reserve was at 4.53 million dmt which supported with gold processing and refining
PT Aneka Tambang Tbk is a vertically integrated
plant at 60 tons per year (9M19 utilization rate: 44.5%), nickel ore reserve which was
and diversified mining and metals company. It is
at 438.4 million wmt with 27,000 TNi of ferronickel plant (94.1%), and bauxite reserve
engaged in the exploration, exploitation, that was at 31.2 million wmt which backed by 300,000 metric tons CGA plant (24.5%).
processing, refining and marketing of nickel ore,
ferronickel, gold, silver, bauxite, coal and other Mixed commodities prospects in short-run. We are bullish toward gold prospect as
precious metals. Its business segment is we predict the price will be at the level of US$1,750 per oz in 2020, supported by
classified into nickel segment, gold and refinery surging demand for gold-backed ETF. Contrarily, we are pessimist toward the outlook
segment and others operating segment. The of nickel in 2020 where we project nickel LME price at USD12,500 per TNi as we
commodities under its nickel segment include believe demand will momentarily shocked due to decreasing manufacturing activities.
ferronickel and nickel ores, while those under its Nevertheless, we expect nickel price to rebound in 2021 as global economy recover.
gold and refinery segment are gold, silver, Expecting temporary earnings shock. We estimate revenue in 2019F and 2020F will
platinum and palladium. Its others operating be at Rp33.5 tn and Rp38.6 tn boosted by increasing gold sales. ANTM’s profitability
segment is comprised of bauxite and coal. will be briefly under pressure due to the collapse of nickel price, though we anticipate
a decent recovery in 2021. We also expect additional debt will be taken this year as
FCF is forecasted to be negative while fund needed for capex is high coupled with
Stock Stats Rp6.89 trillion additional fund needed to repay bond and investment loans in 2020.
Market Capitalization (Billion) : Rp11,823
Shares Outstanding (Billion) : 24.03 Undervalue, initiate BUY with TP at Rp630/share. We used DCF, PBV and
52 Weeks Highest Price : Rp1,175 EV/EBITDA in valuing ANTM. We use WACC assumption of 10.9% and 5.0% terminal
52 Weeks Lowest Price : Rp338 growth. Our TP of Rp630/share reflects forward PBV 20F of 0.73x (21F: 0.70x) and
PER 2020F of 29.2x (21F: 15.3x. Although ANTM profitability will be temporary
YTD Performance : -41.4%
depressed, we believe current market price is below its long-term economic value.
Shareholders Figure 1. Financial Highlights
Negara Republik Indonesia : 0.0% 2016A 2017A 2018A 2019F 2020F 2021F
PT Indonesia Asahan
: 65.0% Revenue 9,106 12,654 25,241 33,507 38,595 40,493
Aluminium (Persero)
Public : 35.0% Gross Profit 852 1,644 3,476 5,314 4,573 5,907
Gross Margin (%) 9.4% 13.0% 13.8% 15.9% 11.8% 14.6%
Operating Profit 8 601 1,853 1,899 1,177 1,943
Operating Margin (%) 0.1% 4.7% 7.3% 5.7% 3.0% 4.8%
Net Profit 65 137 874 988 518 991
Net Margin (%) 0.7% 1.1% 3.5% 2.9% 1.3% 2.4%
EPS (USD) 2.70 5.68 36.39 41.12 21.57 41.25
Research Analyst
ROA (%) 0.2% 0.5% 2.6% 2.9% 1.5% 2.7%
Nugroho R. Fitriyanto ROE (%) 0.4% 0.7% 4.4% 4.8% 2.5% 4.6%
Contact: Nugroho@arthasekuritas.com Source: ANTM, ASI forecast

1
COMPANY BACKGROUND
Diversified metal mining company. Established in 1968 and IPO in 1997, PT Aneka Tambang (Persero)
Tbk (ANTM) is a state-owned enterprise (SOE) engaged in mining business with extensive exposure to a
wide range of commodities including gold, nickel and bauxite. ANTM has three gold mining projects where
total gold ore reserves as of 2018 was recorded at 4.53 million dry metric tons (dmt). These gold mining
projects are located in: 1) Pongkor (reserves: 635 kilo dmt, grade: 4.9 grams per tonne (gpt), IUP operation
production until 2021); 2) Cibaliung (1,590 kilo dmt, 6.7 gpt, IUP operation production until 2025); and 3)
Papandayan (2,708 kilo dmt, 2.3 gpt, IUP operation production until 2027). As of 2018, ANTM has a total
reserves of nickel ore at 438.4 million wmt consisting of saprolite (325.6 million wmt) and limonite (112.8
million wmt) with average nickel grade of 1.81% and 1.45% respectively. Currently ANTM has four
operated nickel ore mines located in East Halmahera, Kolaka, North Konawe and Gag Island. For saprolite,
the largest reserves came from East Halmahera, which stood at 183.5 million wmt (56.4% of total saprolite
reserves) with average nickel grade at 1.87%, while the largest reserves of limonite come from North
Konawe with 83.8 million wmt (74.4% of total limonite reserves) with a relatively low average nickel grade
at 1.38%. For bauxite, ANTM's reserves come from only one location, Tayan Block A with a total reserve of
31.2 million wmt.

Figure 2. ANTM Operating Assets

Source: ANTM, ASI Research

Focusing on downstream. Aside from ore extraction activities, ANTM also continues to develop
downstream activities, where ANTM currently has refinery, smelter and processing plant for gold, nickel
and bauxite. Downstream expansion will be the future of ANTM amidst government's plan to expand high
value-added export commodities which have an impact on export ban of raw commodities including nickel
ore that has been implemented since early 2020. For its gold refining, ANTM is the only one that operates
precious metal processing and refining plant certified by London Bullied Market Association (LBMA) that
able to produce gold purity products with international standard, in which the plant's capacity reached 60
tons of gold per year. In nickel downstream activities, ANTM operates 3 smelters with a total capacity of
27,000 TNi per year in Pomalaa, where currently ANTM is completing the construction of the Haltim
Ferronickel Plan (progress as of 9M19: 98%) in East Halmahera which will provide an additional capacity
of 13,500 TNi. For bauxite, ANTM has a Chemical Grade Alumina (CGA) with a capacity of 300,000 metric
tons and is currently constructing a Smelter Grade Alumina Refinery (SGAR) with a capacity of up to 1
million metric tons per year.

2
Figure 3. ANTM Revenue Breakdown 9M19 Figure 4. ANTM Revenue by Destination 9M19
Precious Metal Silver Coal Other Precious
Alumina Refining 0% 0% Metal
2% 2% 0% Nickel 87% 13%
Bauxite Ore
2%
Nickel Ore
10%
Prec. Metals & Refinery 61% 39%

Ferronickel
15%
Bauxite and Alumina 88% 12%

Gold
69% Other 100%

0% 25% 50% 75% 100%

Export Domestic

Source: ANTM, ASI Research Source: ANTM, ASI Research

Gold as the backbone. As of 9M19, the majority of ANTM income derived from the sale of gold which was
recorded at Rp17.0 trillion, equivalent to 69.4% of total revenue. To note, in that period ANTM's gold sales
volume was recorded at 26,712 kg where gold production volume was recorded at 1,485 kg (5.6% from
total gold sales volume). The difference between production volume and sales volume comes from gold
trading activities, where ANTM only able to obtain operating margins in the range of 2% - 3% resulting to
lower margin compared to other segments. For information, the majority of ANTM's revenue is obtained
from export sales with the proportion reaching 68% of total sales.

Figure 5. ANTM Operating Income by Segment 9M19 Figure 6. ANTM Operating Margin Breakdown 9M19
18,000 30%
USD Billions

25.0%
16,000 20%
14,000 10.5% 10%
12,000 2.3%
Head Office 0%
-22% 10,000
-10%
8,000
-20%
Other 6,000
-6% -30%
4,000
Nickel -40%
55% 2,000
Bauxite and
Precious Metals 0 -50%
Alumina -53.6%
3% and Refinery -2,000 -60%
14%
Nickel Precious Bauxite and Other
Metals and Alumina
Refinery
Revenue Operating Income Operating Margin (RHS)

Source: ANTM, ASI Research Source: ANTM, ASI Research

Nickel refinery is the gameplay. Although sales from the nickel segment only ranked second in terms of
its contribution to total sales, nickel is in fact the main important commodity with the largest contribution
to operating profit, in which as of 9M19 operating income from nickel segment was recorded at Rp1.5
trillion. For information, revenue from nickel comes from sales of nickel ore and ferronickel, which per
9M19 sales volume was recorded at 5.5 million wmt and 19.3 thousand TNi respectively. In terms of
production volume, ANTM produces 7.4 million wmt of nickel ore and 19.1 thousand ferronickel.

3
 INDUSTRY ANALYSIS

Increased global gold supply. In 2019, global gold supply was recorded at 4,776 tons (+2.2% YoY) where
the increase in supply was driven by increase in recycled gold by 1,304 tons (+10.9% YoY) although gold
production was decreased by -1.3% YoY to 3,464 tons. The increase in recycled gold was driven by sharp
rise of gold prices in 2019 which rose by +14.5% YoY. We estimate the same trend will continue in 2020
and estimate gold supply will rise to 4.933 tons (+3.3% YoY) driven by increase in recyled gold at 1,435
tons (+10.0% YoY), and gold production at 3,498 tons (+1.0% YoY) along with rise in gold prices.

Figure 7. Gold Supply Trend (Tonne) Figure 8. Global Gold Production (2018)
5,000
4,555 4,718 4,586 4,673 4,776
4,319 4,531 4,330 4,496 4,435

1,304
1,176
1,282

1,156
1,671
1,651
1,679

1,121
1,188
1,248

4,000 China, 12%

3,000 Australia,
9%

2,000 Russian
Federation, 8%
Others, 59%
1,000
2,748

2,857

2,929

3,110

3,203

3,301

3,398

3,455

3,509

3,464

United
States, 6%
-
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Canada, 5%
(1,000)
Mine production Recycled gold Net producer hedging

Source: Gold.org, ASI Research Source: Gold.org, ASI Research

Surge in ETF gold-backed demand boost price. Gold global demand in 2019 was recorded at 4,383 tons
or decreased by -1.3% YoY due to decline in consumer demand in jewelery, inline with significant increase
in gold prices and softer global economy. Although physical gold demand from jewelery declined, demand
from investment especially from gold-backed ETFs recorded drastic increase to 401 tons or increased
+426% YoY driven by demand surged for save havens along with rising global risks. We predict the same
trend will persist in 2020, driven by increasing global uncertainty over the Covid-19 outbreak, where we
estimate global demand in 2020 to reach 4,513 tons (+3.0% YoY) that will mainly driven by increase in ETF
gold-backed holding . We estimate the gold price will be at the level of US$1,750 per oz in 2020 along with
the increasing demand for ETF as this factor is highly correlated with the gold price movement.

Figure 9. Gold Demand Trend (Tonne) Figure 10. ETF Holding and Gold Price
6,000 4,578 3.500

5,000 4,761 4,658 4,407 4,352 3.000

4,172 4,350 4,284 4,442 4,383
4,000 2.500
1,731

1,067

1,092

1,094
1,047

3,000
1,312
1,502
1,204

1,073

2.000
871

2,000
1.500
1,000
2,044

2,092

2,141

2,736

2,543

2,478

2,017

2,255

2,281

2,135

1.000
-
500
(1,000)
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 -
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Jan-16
Jul-16
Jan-17
Jul-17
Jan-18
Jul-18
Jan-19
Jul-19
Jan-20

Jewellery Total bar & coin demand

Technology Central bank & other inst
ETFs & similar products Gold-backed ETF Holding (Tonnes) Gold Price (US$/oz)

Source: Gold.org, ASI Research Source: Gold.org, ASI Research

4
 Tightened nickel supply in 2020. Indonesia is the major global producer of nickel with output reaching
800 thousand tons in 2019, equivalent to 29.8% of total global nickel production of 2.68 million tons. In
terms of resources, Indonesia is ranked second with total resources in 2019 recorded at 33.3 million tons,
equivalent to 18.7% of total global resources, where the majority of nickel types are laterite nickel. From
2016 to 2019, global nickel production continued to increase with CAGR of +8.7% which was mainly driven
by the significant growth of nickel production in Indonesia that grew with CAGR 2016 -2019 of +59.0%.
This production growth was also supported from the re-allowance of nickel exports which were once
banned in Indonesia. However, in 2020 we expect global nickel production to fall by -1.8% YoY to 2.63
million tons, mainly due to the decline in Indonesian production to 720 thousand tons (-10% YoY) driven
by nickel ore export ban in Indonesia which startedon early 2020.

Figure 11. World Nickel Producer (2019) Figure 12. Historical Nickel Production (Kilo Ton)
3.000
2.630 2.682
2.450 2.404
2.500
2.220 2.280
2.090 2.160
2.000 1.940
Others
29% Indonesia
30% 1.590
1.500 1.400

1.000

Australia 500
7% Philippines
16%
-
Russia 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
New Caledonia 10%
8% Indonesia Philippines Russia New Caledonia
Australia Others

Source: USGS, ASI Research Source: USGS, ASI Research

Figure 13. Historical Nickel Demand (Kilo Ton) Figure 14. Stainless Steel Production (Kilo Ton)
2.500 60.000
2.293
2.226
50.729
2.036 50.000 48.081
2.000 1.896 45.778
41.686 41.548
40.000 38.506
35.917
1.500

30.000

1.000
20.000

500
10.000

- -
2015 2016 2017 2018 2012 2013 2014 2015 2016 2017 2018
China Europe Japan Others China Asia (except China) EU Other Americas

Source: Glencore, ASI Research Source: ISSF, ASI Research

Temporary contraction on nickel demand. Nickel demand continues to increase where in 2018 total
global demand from nickel reaches 2.29 million tons, grew +3.0% YoY. The sustained increase in nickel
demand is supported by stainless steel production that continue to grow with CAGR 2012 - 2018 reach
5.9%, where in 2018 stainless steel production reached 50.73 million tons (+5.5% YoY). As information,
more than 70% of nickel applications come from stainless steel production. However, we estimate nickel
demand in 2020 will decrease to 2.23 million tons (-2.7% YoY) as global PMI drops to 39.4 in March 2020
(February 2020: 46.1) from the negative impact of the spread of the Covid-19 virus. Thus, we predict that
the LME nickel price in 2020 will be at the level of USD12,500 per TNi. Nonetheless, we expect a rebound
in nickel demand in 2021 as global economy recover and ease pressure on global manufacturing activities.

5
 FINANCIAL ANALYSIS

Increasing total sales backed by surging gold sales volume. ANTM experienced a significant increase
in sales, which in 9M19 was recorded at Rp24.2 trillion (+23.0% YoY). Significant in sales was inseparable
from the increase in gold sales volume, where in 9M19 was recorded at 26.7 tons (+19.3% YoY). From the
total sales volume, the sales volume of gold produced by ANTM was only 1.5 tons (+ 0.5% YoY), or
equivalent to 5.6% of the total gold sales volume. We project that in 2020 ANTM's gold production volume
will rise to 2.1 tons (+ 7.2% YoY) driven by additional production from the Papandayan site, although from
2021 going forward the volume of gold production will drop due to depleted gold reserves in Pongkor gold-
mining site. We estimate ANTM’s revenue in 2019F and 2020F to reach Rp33.5 tn and Rp38.6 tn.

Figure 15. ANTM Revenue (IDR Bn) Figure 16. Gold Production Volume
40,000 38,595 120% 3,000 10%
99.5% 7.2%
2,561 5%
35,000 33,507 100%
2,500 2,334 -0.1% -0.6% 0.4% 0%
2,211
30,000 80% 2,209 1,963 2,104
-5.3% -5%
1,967 1,956
25,241 2,000 -8.9%
25,000 60% -11.0% -10%
39.0% -15%
20,000 32.7% 40% 1,500
1,294 -20%
15,000 11.8% 15.2% 20%
12,654 -25%
11,298 4.9% 1,000
9,421 10,532 9,106 -30%
10,000 0%
-16.6% -13.5%
500 -35%
5,000 -20% -38.5%
-40%
- -40% - -45%
2013A 2014A 2015A 2016A 2017A 2018A 2019F 2020F 2021F 2013A 2014A 2015A 2016A 2017A 2018A 2019F 2020F 2021F
Gold Ferronickel Nickel Ore Others Growth % (RHS) Volume (Kg) Growth % (RHS)

Source: ANTM, ASI Research Source: ANTM, ASI Research

Figure 17. Nickel Ore Production Volume Figure 18. Ferronickel Production Volume
14.0 300% 45000 40%
35.9%

11.5 240.8% 250% 40000 38,325 35%

12.0
200% 35000 30%
10.0 9.3 25%
8.7 150% 30000 28,200
8.0 24,867 25,713 20%
100% 25000 17.9%
21,761
67.2% 20,293 14.3% 15%
6.0 44.8% 5.6 50% 20000 18,249
29.9% 16,850 17,210 10%
9.7%
-1.2% 0% 15000 7.2%
-6.7% 5%
4.0 3.4%
2.6 -50% 10000 2.1%
-90.1% -77.3% 0%
2.0 1.7 1.6
1.1 2.0 -100% 5000 -5%
-7.7%
- -150% 0 -10%
2013A 2014A 2015A 2016A 2017A 2018A 2019F 2020F 2021F 2013A 2014A 2015A 2016A 2017A 2018A 2019F 2020F 2021F
Volume (Mn Wmt) Growth % (RHS) Volume (TNi) Growth % (RHS)

Source: ANTM, ASI Research Source: ANTM, ASI Research

Ferronickel expansion come to rescue. Ore nickel production in 9M19 was still growing and was
recorded at 7.4 million wmt (+13.9% YoY). However, sales of nickel ore in 2020 are predicted to experience
a significant decline due to export ban of low grade nickel ore, where domestic smelter capacity is predicted
to not be able to accommodate domestic production which in turn will have impact on falling selling prices
and force producers like ANTM for seizing its low grade nickel ore production. In contrast to nickel ore, we
predict ferronickel production to increase at 28,200 TNi in 2020 (+9.7% YoY), in line with additional
capacity of 13,500 TNi as new smelters in East Halmahera is expected to operate in 2020 resulting to 40,500
TNi of total ferronickel capacity.

6
 Shrink in profitability as nickel price depressed. ANTM's gross margin was expanding where in 9M19
was recorded at 15.2% and we expect it to be at the level of 15.9% in FY19 (FY18: 13.8%). The margin
expansion was mainly due to increase in LME nickel prices that surged more than 20% in 2019, although
the increase in sales of the gold segment continued to reduce profitability going forward due to the increase
in gold trading proportion. Doubled with declining nickel prices, in 2020 we estimate ANTM's profitability
will be under pressure where gross margin will be at the level of 11.8% and net margin at the level of 1.3%.
Nevertheless, we forecast major recovery in 2021 as nickel price is expected to regain as normalized
demand is expexted.

Figure 19. ANTM Profitability Figure 20. ANTM Debt-to-Equity Ratio (IDR Bn)
20% 25,000 0.90
15.9%
14.3% 14.6%
15% 13.0% 13.8% 0.80
11.8%
9.4% 9.6% 20,000 0.70
10% 8.4% 8.7%
10.8% 11.3% 11.3% 6.8% 0.67
7.4% 4.4% 4.8% 0.60
5% 3.6% 7.1% 4.6%
1.9% 2.5% 15,000 0.55
0.7% 1.1% 0.53 0.54 0.52
0.51 0.50 0.50 0.51 0.50
3.5% 2.9%
0% 3.2% 1.3%
2.4%
0.6% 0.4% 0.7% 0.40
-5% -6.2% 10,000
-7.9%
0.30
-10% -7.9%
5,000 12,793 0.20

12,050

18,317
10,110

18,409

18,490

19,739

20,477
10,221

20,707
10,621

21,576
11,221
-15%
6,785

8,015

9,905

9,399

9,921
-13.7% 0.10

-20% - -
2013A 2014A 2015A 2016A 2017A 2018A 2019F 2020F 2021F 2013A 2014A 2015A 2016A 2017A 2018A 2019F 2020F 2021F
Gross Margin EBITDA Margin Net Margin Return on Equity Equity Interest Bearing Liabilities DER (RHS)

Source: ANTM, ASI Research Source: ANTM, ASI Research

Figure 21. ANTM Debt Payment Schedule (IDR Bn) Figure 22. ANTM Cash Flow (IDR Bn)
8.000 8,000
6,887
6.894
7.000
6,000
6.000
4,000
5.000 2,666
887 956 1,875 1,679
4.000 2,000 1,015 1,379 1,197
477
392 489 -568
2.954 157 -27 -620 50 111 93
3.000 -
-367 -579
-1,247 -1,615 -719 -829
2.000
-2,000 -2,490 -1,511
-1,639 -1,382
1.000 -2,104 -2,258 -2,026
-2,647 -2,594 -2,573
-2,891
16 - - -4,000
- 2013A 2014A 2015A 2016A 2017A 2018A 2019F 2020F 2021F
2019 2020 2021 2022 2023 and
Beyond FCF Operating Investing Financing

Source: ANTM, ASI Research Source: ANTM, ASI Research

Slight increase of debt level in 2020F. ANTM's capital structure remains strong and its debt level is stable
and has improved where in 9M19 the debt-to-equity ratio was at 0.49x (9M18: 0.55x). However, with free
cash flow that has always been negative since at least 2013, and capex needs that is estimated to be more
than Rp2 billion in 2020 for the construction of CGA smelters and completion of nickel smelters in East
Halmahera (2019: Rp3.3 trillion), ANTM will most likely to increase its debt. In 2020 ANTM will need at
least Rp6.89 trillion to repay bond payments and investment loans, where cash and cash equivalents in
9M19 were recorded at Rp3.46 trillion. Nonetheless, we forecast the debt level of ANTM will still be sound
in 2020F with debt-to-equity ratio at 0.51x.

7
 VALUATION

Initiate BUY with TP of Rp600/share. We used DCF, PBV and EV/EBITDA in valuing ANTM, with 50%,
25%, and 25% weights respectively. In DCF model, we use WACC assumption of 10.9% which derived from
cost of equity of 16.6%, cost of debt of 4.2%, with 54.6% and 45.4% weighting respectively. The terminal
growth assumption is at 5.0% which has factored the gold, nickel and bauxite industry growth potential in
the long run. For relative valuation, we use PBV and EV/EBITDA targets of 0.96x and 12.31x respectively,
5% premium to the last 5 years and 3 years average respectively. Our TP of Rp630/share reflects forward
PBV 20F of 0.73x (21F: 0.70x) and PER 2020F of 29.2x (21F: 15.3x), upside potential of +28.0% from
current price at Rp492 per share. Although we predict ANTM's profitability will be depressed in 2020 along
with the decline in the prices of its main commodities due to diminishing global demand as the negative
effects of the Covid-19 kicked in, from valuation wise we believe that current market price is well below its
fair price.

Figure 23. Historical PBV Band Figure 24. Historical EV/EBITDA Band
1,5 25
1,36
1,3 19,7
20
1,13
1,1 15,7
15
0,91
0,9 11,7
10
0,7 0,68
7,8
0,63 6,5
5
0,5
3,8
0,46
0,3 0
Apr-15 Apr-16 Apr-17 Apr-18 Apr-19 Apr-17 Oct-17 Apr-18 Oct-18 Apr-19 Oct-19
PBV -2 StDev -1 StDev Mean +1 StDev +2 StDev EV/EBITDA -2 StDev -1 StDev Mean +1 StDev +2 StDev

Source: Yahoo Finance, ASI Forecast Source: Yahoo Finance, ASI Forecast

Figure 25. DCF Assumptions Figure 26. Valuation Summary

Variable Value Valuation TP Weight Weighted TP

Risk-free Rate 8.0% Relative Val.

Risk Premium 7.1%
PBV 825 25.0% 206
Beta 1.21
EV/EBITDA 1,035 25.0% 259
Cost of Equity (CoE) 16.6%
Cost of Debt (CoD) 4.2% Absolute Val.

Weighted CoE 54.6% DCF 337 50.0% 169

Weighted CoD 45.4%
Fair Value 633
WACC 10.9%
Terminal Growth Rate 5.0% Rounded TP 630

Source: ASI Research Source: ASI Research

8
Key Financials (IDR Billion)

Income Statement 2017A 2018A 2019F 2020F 2021F Cash Flow 2017A 2018A 2019F 2020F 2021F
Revenue 12,654 25,241 33,507 38,595 40,493 Net Income 137 874 988 518 991
COGS (11,010) (21,765) (28,193) (34,022) (34,586) Depre and Amor 829 1,001 1,302 1,459 1,582
Gross Profit 1,644 3,476 5,314 4,573 5,907 Change in WC 214 (371) 33 (652) 228
Operating Expenses (1,043) (1,624) (3,415) (3,396) (3,965) Others (1,473) 1,895 (645) (128) (136)
Operating Income 601 1,853 1,899 1,177 1,943 CF from Operations (294) 3,399 1,679 1,197 2,666
Other Income/Expenses 690 324 330 337 344 Capex and Acquisition (1,218) (5,547) (2,258) (2,026) (2,573)
Net Interest (348) (391) (420) (444) (482) CF from Investment (1,218) (5,547) (2,258) (2,026) (2,573)
Interest Expense (608) (554) (532) (542) (561) Change in Debt (506) 522 300 400 600
Interest Income 260 164 112 98 79 Change in Equity (23) 423 56 57 58
Profit/Loss of JV (488) (520) (266) (273) (279) Dividend - (48) (306) (346) (181)
Pretax Income 454 1,266 1,544 797 1,525 Change in Other Equity (32) (1) - - -
Tax Expenses (318) (391) (556) (279) (534) CF from Financing (561) 897 50 111 477
Net Profit 137 874 988 518 991 Net Cash Flow (2,073) (1,252) (529) (718) 570
Minority Interest (0) 0 0 0 0 Beginning Cash 7,623 5,551 4,299 3,770 3,052
Net Profit Att to Parent 137 874 988 518 991 Ending Cash 5,551 4,299 3,770 3,052 3,623
Balance Sheet 2017A 2018A 2019F 2020F 2021F Key Ratio 2017A 2018A 2019F 2020F 2021F
ASSET Current Ratio (x) 1.62 1.54 1.57 1.51 1.53
Cash & cash eq 5,551 4,299 3,770 3,052 3,623 Quick Ratio (x) 1.39 1.17 1.19 1.07 1.11
Trade receivables 971 924 1,102 1,480 1,331
Inventories 1,258 2,028 1,931 2,423 2,369 Net Gearing (x) 0.21 0.28 0.32 0.37 0.35
Other current assets 1,222 1,248 1,248 1,311 1,376 Debt-to-Equity Ratio (x) 0.51 0.50 0.50 0.51 0.52
Total Current Assets 9,002 8,498 8,051 8,267 8,699 Interest Coverage (x) 0.99 3.34 3.57 2.17 3.46
Restricted Cash 22 108 106 108 110 Debt Service Coverage (x) 2.36 5.15 6.02 4.87 6.28
Investment in JV 2,526 1,097 1,075 1,054 1,033
Net Fixed Assets 14,093 20,128 21,102 21,677 22,673 BS-based Accrual Ratio 7.7% 12.7% 6.0% 4.9% 3.1%
Net Mining Properties 934 869 838 811 784 CF-based Accrual Ratio 65.8% 108.8% 128.2% 140.4% 143.2%
Net Exp and Eval Assets 665 670 705 746 788
Goodwill 102 102 102 102 102 DSO (days) 26 14 12 14 12
Other non-current assets 2,671 1,833 2,130 2,237 2,348 DIO (days) 44 28 25 26 25
Total Non-Current Assets 21,012 24,808 26,058 26,733 27,838 DPO (days) 23 16 16 16 16
Total Assets 30,014 33,306 34,109 35,000 36,537 CCC (days) 47 25 21 24 21
LIABILITIES
Trade payable 806 1,158 1,272 1,491 1,516 GPM 13.0% 13.8% 15.9% 11.8% 14.6%
ST borrowings & current 4,101 2,574 2,555 2,655 2,805 OPM 4.7% 7.3% 5.7% 3.0% 4.8%
Others 645 1,780 1,306 1,333 1,359 EBITDA Margin 11.3% 11.3% 9.6% 6.8% 8.7%
Total Current Liabilities 5,971 8,055 8,497 8,814 9,281 Pretax Margin 3.6% 5.0% 4.6% 2.1% 3.8%
LT debts 5,298 7,348 7,666 7,966 8,416 NPM 1.1% 3.5% 2.9% 1.3% 2.4%
Others 674 708 831 848 865 ROE 0.7% 4.4% 4.8% 2.5% 4.6%
Total Non-Current Liabilities 5,971 8,055 8,497 8,814 9,281 ROA 0.5% 2.6% 2.9% 1.5% 2.7%
Total Liabilities 11,524 13,567 13,631 14,293 14,961
EQUITY EV/EBITDA (x) 13.2 8.3 8.4 7.4 5.5
Paid-in capital 2,403 2,403 2,403 2,403 2,403 PER (x) 110.0 20.6 20.7 22.9 12.0
Additional paid in capital 3,935 3,935 3,935 3,935 3,935 PBV (x) 0.8 0.9 1.0 0.6 0.6
Retained earnings 9,766 10,591 11,273 11,446 12,256
Others 2,387 2,810 2,866 2,924 2,982
Minority interest 0 0 0 0 0
Total Equity 18,490 19,739 20,477 20,707 21,576
Total Liabilities and Equity 30,014 33,306 34,109 35,000 36,537

9
 Disclaimer

INVESTMENT RATINGS: Indicators of expected total return (price appreciation plus dividen yield) within the 12-month
period from the date of the last published report, are: Buy (10% or higher), Neutral (-10% to 10%) and Sell (-10% or
lower).

DISCLAIMER: This report is issued by PT Artha Sekuritas Indonesia, a member of the Indonesia Stock Exchanges (IDX)
and supervised by the Financial Services Authority (OJK). We have based this document on information obtained from
sources we believe to be reliable, but we do not make any representation or warranty nor accept any responsibility or
liability as to its accuracy, completeness or correctness. Expressions of opinion contained herein are those of Artha
Sekuritas Indonesia only and are subject to change without notice. Any recommendation contained in this document
does not have regard to the specific investment objectives, financial situation and the particular needs of any specific
addressee. This document is for the information of the addressee only and is not to be taken as substitution for the
exercise of judgment by the addressee. This document is not and should not be construed as an offer or a solicitation of
an offer to purchase or subscribe or sell any securities.

PT Artha Sekuritas Indonesia

A Member of the Indonesia Stock Exchange

Equity Tower, Lt. 22 E-F

Sudirman Central Business District Lot 9
Jalan Jendral Sudirman Kav 52-53
Jakarta Selatan, 12190

Telephone +(62) (21) 515 2338

Fax +(62) (21) 515 2339
Email cs@arthasekuritas.com
Website www.arthasekuritas.com

10
Validasi Ketersediaan Dana/Efek dan Batasan Otorisasi

Gambar diatas merupakan contoh data portfolio akun ritel yang diperoleh melalui aplikasi mobile anggota
bursa (AB) Mandiri Sekuritas atau MOST (Mandiri Online Securities Trading). Apabila nasabah ingin
melakukan transaksi, validasi ketersediaan dana dapat dilakukan dengan melihat Cash T-0 atau Net Cash
T+2, dimana:
- Cash T-0 : Merupakan dana kas pada hari tersebut sebelum ditambah/dikurang dengan
(Nomer 1) penyerahan efek/dana oleh pihak penjual dan penyerahan dana/efek oleh pihak
pembeli yang diselesaikan dalam dua hari kerja setelah transaksi terjadi di bursa
- Net Cash T-2 : Merupakan dana kas bersih pada hari tersebut setelah ditambah/dikurang dengan
(Nomer 3) penyerahan efek/dana oleh pihak penjual dan penyerahan dana/efek oleh pihak
pembeli yang diselesaikan dalam dua hari kerja setelah transaksi terjadi di bursa

Dalam hal nasabah ingin menjual kepemilikan efeknya, validasi efek dapat dilakukan dengan melihat pada
table efek-efek yang dimiliki dalam portfolio.
Disisi lain, untuk mengetahui batasan otorisasi perdagangan yang diperbolehkan dapat dilihat pada
(Nomer 2), dimana hal ini dibutuhkan apabila nasabah ingin bertransaksi melebihi dana yang dimiliki
(transaksi margin).
 Input Transaksi Jual Beli dan Dokumentasi

Buy Order

Buy Order Order Expire :

Board : RG

Principal
Customer : AM

Shares : ANTM Shares Name

Price : 492 Haircut : 15%

Quantity : 10.000 Last Trade Price : 492

Total Amount : 492.000.000 Best Bid : 494

Best Offer : 492

BUY CANCEL

Classification: Internal Use

 Buy Confirmation

Buy Order Confirmation

Customer : Principal AM

Shares : ANTM

Price : 492

Quantity : 10.000

Total Amount : 492.000.000

OK CANCEL

Order Accepted

ORDER ACCEPTED

Transaksi Order Buy Anda untuk Saham ANTM

Pada harga 492 dengan volume 10.000 Lot telah
diterima oleh BEI dengan Order ID:0592225494

Close

Classification: Internal Use