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1、US$/t,US$/t,%,%,October 29,2012ASEAN:Metals likely balanced 2013E coal market,We believe that fundamentals are improving as producers are cutting coal,COAL AND OIL(BRENT)PRICE ASSUMPTIONS,production and CAPEX plans.We have lowered our 2013E global seabornecoal supply by 2%,and are forecasting a more
2、 balanced 2013E market,vs.,Coal price(NEWC,CY)Coal price(NEWC,CY)Old,2011 2012E 2013E 2014E121 97 105 105121 101 110 117,a prior surplus.Our forecasts suggest only 1%growth in seaborne coal,change%YoY growth%,0%-4%23%-20%,-5%-10%8%0%,supply in 2013E vs.7%-9%in 2011-12E.However,Newcastle coal price h
3、asremained weak over last 3 mths,due to some potential switching of metcoal into the high grade thermal coal market post a sharp met coal pricedrop,but this may be short lived as we think met coal price has bottomed.,Brent oil priceBrent oil price Oldchange%YoY growth%Coal as%of oil equiv,US$/bblUS$
4、/bbl%,1111110%35%23%,114120-5%3%18%,110130-15%-4%20%,105NANA-5%21%,SUMMARY OF TARGET PRICES AND RATINGS,Near-term catalysts:high price annual contract expiry,seasonality,GS,Price,Potential,We believe supply cut momentum may pick up further in 4Q12/1Q13 as,TickerHRUM.JK,ratingBuy*,24-OctRp 5400,12-mo
5、 TP up/downside7,500 39%,high-priced annual contracts expire(20%-25%of seaborne coal is cashnegative at the spot coal price,in our view).Our analysis shows that coalprices historically rise during the winter.Also,our US team expects US gasprices to rise to US$4/mmbtu in 2013E which may lead to less
6、coal to gas,BANP.BKBUMI.JKSAKR.SIADRO.JKITMG.JKPTBA.JK,BuyNeutralNeutralNeutralNeutralSell,Bt 388Rp 690S$1.85Rp 1390Rp 42550Rp 16150,5307501.851,25037,50012,000,37%9%0%-10%-12%-26%,substitution in 2013E(i.e.,less US coal exports likely in 2013E).Meanwhile,we estimate Newcastle coal is US$15/t lower
7、relative to Chinas spot coal,ASEAN COAL SECTOR VALUATION TABLE,price on parity and US$21/t relative to the GS China teams 2013 forecast.,Price,Mkt cap,Liquidity EV/6-mos P/E(X)EBITDA(X),Ticker,24-Oct,US$m,US$m 2013E,2013E,Oil cut prompts lower coal prices,but coal may outperform oilCoal prices look
8、undervalued vs.oil:the coal to oil ratio(heat equiv basis),HRUM.JK Rp 5,400BANP.BK Bt 388BUMI.JK Rp 690SAKR.SI S$1.85,1,5353,5151,4741,719,5.224.411.117.9,7.68.06.912.5,4.05.56.17.2,is at a trough of 15%vs.the historical avg of 22%,but with a tighteningcoal market we believe coal may outperform oil
9、prices.While we lower our,ADRO.JK Rp 1,390 4,680ITMG.JK Rp 42,550 5,061PTBA.JK Rp 16,150 3,917,5.85.14.4,13.212.514.4,5.96.89.3,2012E-14E coal prices by 4%-10%in the wake of a recent downgrade ofBrent oil forecasts by our global oils team,our new 2013E-14E coal priceforecast of US$105/t implies a hi
10、gher coal to oil ratio of 20%-21%.Maintain Buy on Harum(on CL)and Banpu on low valuationsWe reduce our 2012E-14E EPS by 0-10%and 12-m TPs by 1%-6%as lowercoal prices are partly offset by lower costs(fuel/oil is about 30%of cashcosts).We maintain Buy on Banpu as their longer-term investments arestart
11、ing to mature,while valuations are compelling(8.0X 2013E P/E vs.peers at 10.7X).We believe Banpu is also a cheaper way to get exposure toITMG as Banpu ex-ITMG stub is trading at only 0.12X P/B and 2X 2013EP/E.We maintain our Buy(CL)on Harum due to its strong volume growth,high CROCI,low valuation(7.
12、6X 2013E P/E),and high 7.3%dividend yields.,*On our Regional Conviction List.Note:Our 12-m TPs arebased on 2013E Directors Cut methodology(excluding theTP for Sakari Resources,which is based on 7X 13EEV/EBITDA to factor in M&A and bid potential).Key risks:Lower-than-expected coal/oil prices,regulato
13、ry uncertainty.RELATED RESEARCHMining Commodities:Cutting thermal coal prices on softerChina outlook and cheaper oil,published October 29,2012,Nikhil Bhandari+65-6889-2867 Goldman Sachs(Singapore)PtePatrick Tiah,CFA+65-6889-2468 Goldman Sachs(Singapore)PteHong Li Tan+65-6889-2866 Goldman Sachs(Singa
14、pore)PteThe Goldman Sachs Group,Inc.,Goldman Sachs does and seeks to do business withcompanies covered in its research reports.As a result,investors should be aware that the firm may have a conflict ofinterest that could affect the objectivity of this report.Investorsshould consider this report as o
15、nly a single factor in makingtheir investment decision.For Reg AC certification and otherimportant disclosures,see the Disclosure Appendix,or go Analysts employed by non-US affiliates are not registered/qualified as research analystswith FINRA in the U.S.Global Investment Research,3,9,11,13,15,2,Oct
16、ober 29,2012,ASEAN:Metals&Mining:Coal,ContentsSupply cuts are accelerating;likely balanced 2013E coal marketLowering EPS/TP on lower coal prices;partly offset by lower costsHarum(HRUM.JK,Buy,on CL):Strong volume growth,high dividend yield,inexpensive valuationsBanpu(BANP.BK,Buy):Centennial re-pricin
17、g to drive growth;valuations inexpensiveBukit Asam(PTBA.JK,Sell):Valuations are stretched,Key risks for the sectorDisclosure AppendixAll prices in this report are as of the market close of October 24,2012,unless statedotherwise.Exhibit 1:Ratings and 12-month target price changesOur valuations assume
18、 stocks converge to sector-average DC ratio,1521,Share,12 mo TPs,TP implied,12-mo forward,TP implied,12-mo forward,price,%,potential,EV/EBITDA,EV/EBITDA,P/E,P/E,Curr,24-Oct,Rating,Old,New,change,up/downside,TP methodology,CY12E,CY13E,Range,Avg,CY12E CY13E,Range,Avg,Harum EnergyBanpuBumi ResourcesSak
19、ari ResourcesAdaro EnergyITMGBukit Asam,RpBtRpS$RpRpRp,5,4003886901.851,39042,55016,150,Buy*BuyNeutralNeutralNeutralNeutralSell,7,7505508001.921,30038,00012,500,7,5005307501.851,25037,50012,000,-3%-4%-6%-4%-4%-1%-4%,39%37%9%0%-10%-12%-26%,Directors CutDirectors CutDirectors Cut7X 13E EV/EBITDADirect
20、ors CutDirectors CutDirectors Cut,7.0X7.7X6.1X8.4X4.6X5.5X5.1X,6.1X6.8X6.2X7.2X5.4X5.8X6.3X,4-9X3-14X2-16X2-17X2-8X1-9X2-15X,6X7X6X7X5X6X7X,11.6X12.4X8.2X15.7X8.9X10.0X8.6X,10.5X10.9X7.5X12.5X11.9X11.1X10.7X,NA3-16X2-30X3-26X3-18X2-15X4-18X,NA11X10X11X13X10X12X,*Denotes that this stock is on our reg
21、ional Conviction List.Sakari Resources 12-m TP is based on 7X 2013E EV/EBITDA to factor in M&A and bid potential.Source:Bloomberg,Goldman Sachs Research estimates.Exhibit 2:Thermal coal sector valuationsAveragedaily trading,Market,volume,P/B,ROE,Div,EV/,EV/,GS,Price,cap,(US$mn),EPS growth(%),P/E(X),
22、EV/EBITDA(x),(x),%,yield(%)reserves,resources,SEDOL1,Ticker,rating,Curr,24-Oct,(US$mn),6-mos,2012E,2013E,2012E 2013E,2012E 2013E,2012E,2012E,2012E(US$/ton),(US$/ton),Indonesia,PT Harum EnergyBumi ResourcesAdaro EnergyBukit AsamPT Indo Tambangraya,HRUM.JKBUMI.JKADRO.JKPTBA.JKITMG.JK,Buy*NeutralNeutra
23、lSellNeutral,IDRIDRIDRIDRIDR,5,4006901,39016,15042,550,1,5351,4744,6803,9175,061,5.211.15.84.45.1,-5%-8%-25%4%-14%,10%8%-25%-19%-10%,8.47.59.911.611.3,7.66.913.214.412.5,4.76.04.97.56.4,4.06.15.99.36.8,3.92.11.73.74.2,47%27%17%32%37%,7.3%0.0%3.5%3.2%6.6%,15.43.05.51.610.4,3.00.71.00.52.9,Thailand,Ba
24、npu PCL,BANP.BK,Buy,THB,388,3,515,24.4,-2%,14%,9.1,8.0,5.9,5.2,1.3,14%,3.3%,8.0,1.1,Singapore,Sakari Resources,SAKR.SI,Neutral,S$,1.85,1,719,17.9,-40%,26%,15.7,12.5,8.4,7.2,2.5,16%,3.8%,12.5,1.2,ASEAN(AVERAGE),-13%,1%,10.5,10.7,6.3,6.3,2.8,27%,4.0%,8.1,1.5,China,Yanzhou Coal MiningChina Shenhua Ener
25、gyChina Coal Energy Co,1171 HK1088 HK1898 HK,SellBuyNeutral,HKDHKDHKD,12.6632.907.86,8,03484,43613,447,14.241.712.5,-19%-2%-18%,-21%-2%-13%,6.711.410.2,8.411.711.8,6.86.46.0,6.16.06.5,1.12.11.0,15%18%9%,4.5%3.4%2.8%,4.111.51.5,NANANA,India,Coal India,COAL.BO,Neutral,INR,358.55,41,998,NA,16%,11%,14.2
26、,12.8,7.3,5.9,4.9,34%,2.8%,1.9,0.7,Australia,BHP BillitonRio Tinto,BLT.LRIO.L,BuyNeutral,GBP(p)GBP(p),1,9823,118,168,12896,009,212264,-23%-42%,1%15%,11.010.7,10.99.3,6.26.1,6.05.4,2.41.6,20%14%,3.7%3.5%,NANA,NANA,US,Arch CoalConsolPeabody,ACICNXBTU,SellBuyNeutral,US$US$US$,8.0035.5928.35,1,3948,1187
27、,604,103124214,NM-61%-43%,NM78%4%,NA30.113.4,NA17.013.0,8.69.57.0,6.37.46.3,0.62.11.3,-18%9%9%,2.5%1.4%1.2%,0.52.41.1,NANANA,GLOBAL AVERAGE,-22%,9%,13.1,11.7,7.0,6.2,2.0,15%,3.0%,3.9,Note:Based on calendar year financials.*Denotes that this stock is on our regional Conviction List.Source:Bloomberg,G
28、oldman Sachs Research estimates.Goldman Sachs Global Investment Research,Jan-07,Jan-08,Jan-09,Jan-12,Jul-07,Jul-08,Jul-09,Jan-10,Oct-10,Jan-11,Oct-11,Jul-12,Apr-07,Apr-08,Apr-09,Oct-12,Apr-10,Jul-10,Apr-11,Apr-12,Oct-07,Oct-08,Oct-09,Jul-11,Index(20July2012=100),27-Jul,17-Aug,31-Aug,21-Sep,10-Aug,28
29、-Sep,14-Sep,12-Oct,3-Aug,24-Aug,Index(July=100),Index(July=100),19-Oct,20-Jul,7-Sep,5-Oct,94,80,3,October 29,2012,ASEAN:Metals&Mining:Coal,Supply cuts are accelerating;likely balanced 2013E coal marketCoal prices have a strong seasonality going into the winter seasonCoal prices have remained weak ov
30、er the last three months,we believe due to:(1)someswitching of met coal into the high grade thermal coal market post the sharp decline in metcoal prices and(2)3Q being a seasonally weak period for coal prices historically.However,our Australian analyst believes met coal prices have likely bottomed.F
31、or further details,refer to our October 15 report,Mining Commodities:Copper returns to Tier 1 Status.,Exhibit 3:Newcastle coal prices started to rebound inJune 2012,but recently fell again.Newcastle thermal coal prices(US$/t)200180,Exhibit 4:.we believe mainly due to some switching ofmet coal into t
32、he higher-grade thermal coal marketHigh-grade coal prices underperforming low-grade recently110106,160102140,120,98,100High grade coal prices declined,whilelower grade coal prices flat to up-webelieve due to switching of some of metcoal into higher grade thermal market,6040,90,Newcastle 6000 NAR,Ind
33、onesian coal 4900 NAR,Australia 5500 NAR,Source:McCloskey.,Source:McCloskey,Goldman Sachs Research estimates.Further,our analysis indicates that coal prices typically rise historically during the winter.We forecast this years seasonality to be different from what we saw last year:We expectnormal win
34、ter weather this year amid supply cuts while in 2011 we saw mild winterweather and a supply surge.,Exhibit 5:Coal prices typically exhibit strong seasonalitygoing into the winter seasonCoal price seasonality(1996-2012 average),Exhibit 6:We believe seasonality in 2012 will be unlike2011 as this time
35、we assume“supply cuts+normalwinter”vs.in 2011 we saw“supply surge+mild winter”,125.0,1996-2012 average,150.0,120.0,140.0,2009,2010,2011,2012,130.0115.0120.0,110.0105.0,110.0100.0,90.0100.080.0,95.0,70.0,90.0,Jul,Aug,Sep,Oct,Nov,Dec,Jan,Feb,Mar,Apr,May,Jun,60.0,Jul,Aug,Sep,Oct,Nov,Dec,Jan,Feb,Mar,Apr
36、,May,Jun,Source:McCloskey,Goldman Sachs Research estimates.Goldman Sachs Global Investment Research,Source:McCloskey,Goldman Sachs Research estimates.,4,October 29,2012,ASEAN:Metals&Mining:CoalSupply side response is accelerating,further pick-up likelyWe believe fundamentals are starting to improve
37、as coal producers are cutting productionand CAPEX plans(mainly in the US,Indonesia and Australia so far).We believe supply cutmomentum may further pick up in 4Q12/1Q13 as high-priced annual contracts expire.We believe nearly 20%-25%of seaborne coal is cash negative at the spot coal price thisinclude
38、s part of the coal exports out of Australia,Russia,US and low-grade coal productionin Indonesia.,Exhibit 7:Supply-side response in Indonesia on lowerthermal coal pricesChange to 2012 production and capex guidance,Exhibit 8:Supply-side response in Australia on lowerthermal coal prices,2012productiong
39、uidance(mntons),%reduction,Mine,Operator,2H2012impact,AdaroBayanBerauITMG,Previous505319202327,New485117.5202226,toguidance4%10%9%4%,close BlaiAtnoldownsize EnshamClermontexpansiononholdWamboexpansion,RioTintoEnshamRioTintoPeabody,7MT(4.5%ofAustraliathermalcoalexports),BumiTOTAL,7580199,7375188,5%5%
40、,2012capexguidance(US$mn),%reduction,Previous,New,toguidance,AdaroBerauITMG,650700300209,400500160190133,33%42%36%,Source:Company data,Factiva,Goldman Sachs Research.,Source:Company data,McCloskey.,US coal exports peaked;rising gas price may drive less C2G in 2013US coal exports appear to have peake
41、d in May 2012,in line with our expectations,and wenote that the Central Appalachian(CAPP)coal miners in US are still out of the money bynearly US$10/t in exporting coal to the Atlantic basin.In addition,our US coal analyst notes that inventories at US utilities in July(latest availableEIA data)fell
42、to 67 days of demand,14 days above the five-year average.This was downsharply from almost 120 days of demand(46 days above the five-year average)in April.The improvements were driven by:(1)lower production,with Western producers havingshown discipline by quickly cutting volumes in the 1H 2012 and(2)
43、more normal weather-driven demand,in contrast to the extremely mild recent winter,which hurt both thermalcoal and natural gas demand and prices.For further details,we refer readers to our October 8 report,Recovery in coal prices canallow CNX/BTU to rally;ACI to Sell.Goldman Sachs Global Investment R
44、esearch,Coalpriceandcashcostsofsales,$/ton,Oct-09,Oct-10,Oct-11,Jul-09,Jul-10,Jul-11,Jan-09,Jan-10,Jan-11,Jan-12,Apr-09,Apr-10,Apr-11,Apr-12,Jul-12,Coaldemandlosttonaturalgas(MMtons),Jan-11,Apr-12,Oct-12,Jul-11,Jan-,12,Apr-11,Oct-11,Jul-12,5,October 29,2012Exhibit 9:US thermal coal exports peaked in
45、 May 2012and have started to declinemn tons,ASEAN:Metals&Mining:CoalExhibit 10:At current Atlantic coal prices,US miners aremaking cash losses in exporting coal to EuropeCAPP coal price and parity price of API2 into CAPP coal mine,vs.cash costs and total costs$1806.0$160,5.0,$140,CAPP coal miners in
46、 US are making cash,4.03.02.0,$120$100$80$60,losses in selling coal both in domestic andexport(to Atlantic)markets,$401.0$20,0.0,$0,Jan-07,Jan-08,Jan-09,Jan-10,Jan-11,Jan-12,Jan-13,Jan-14,Jan-15,CAPP,Avg Cash Costs,Avg Total Costs,Parity of API2 at CAPP mine in US,Source:McCloskey.,Source:Bloomberg,
47、Company data,Goldman Sachs Research estimates.US Henry Hub gas prices have started to rise and reached near US$3.5/mmbtu recently,which has been driving less coal to gas(C2G)demand substitution in recent months.However,our US team forecasts a further rise in gas prices to US$4/mmbtu in 2013E whichwi
48、ll likely reduce the C2G demand substitution further(i.e.,less US coal exports likely yoyin 2013).For further details,see our October 8 report,Research Roundtable:After recentrally,IPPs/Marcellus E&Ps have best risked upside for$4 2013 gas.,Exhibit 11:US Henry Hub gas prices have started to rise,Exh
49、ibit 12:US coal exports may come down if Henry Hub,gas prices rise to the GS 2013E forecast of US$4/mmbtuCoal demand lost at different Henry Hub gas prices by type(US$/mmbtu),5.54.53.52.5,22020018016014012010080604020,1.5,0$2.00,$2.50,$3.00,$3.50,$4.00,$4.50,$5.00,Henry Hub natural gas price($/MMBtu
50、),Appalachia,Illinois Basin,PRB,Uinta+lignite,Source:DataStream.Goldman Sachs Global Investment Research,Source:EIA,SNL Energy,GS research estimates.,Jul-07,Jul-08,Jul-09,Jan-07,Jan-08,Jan-09,Jan-12,Jan-10,Apr-10,Jan-11,Oct-11,Jul-12,Jul-11,Apr-07,Apr-08,Apr-09,Apr-12,Oct-07,Oct-08,Oct-09,Oct-12,Oct
