United Tractors (UNTR IJ)

Upside from Gold Valuation, Despite a Potentially Softer 3Q25

• We expect UNTR to book softer 3Q25 earnings on lower Komatsu sales and coal price, though 9M25 should still fall broadly in-line.
• Higher gold price should offset our lower gold production assumptions and drive 5-7% upward revision in our FY25-27F estimates.
• We raise our TP to Rp32,200 as we now value UNTR’s gold assets based on domestic peers’ valuation.

3Q25 Preview: A softer quarter from lower Komatsu sales and coal price

We estimate that UNTR’s 3Q25 net profit may soften to ~Rp5.1r (+3.8% qoq/ -15% yoy), bringing the 9M25 estimated core profit to ~Rp13.1tr (-16% yoy), potentially forming 74%/ 76% of our/ consensus FY25F. The estimated softer 3Q25 earnings mainly reflect our expectation of lower heavy equipment sales units in 3Q25 (-27% qoq/ -16% yoy), in-line with mgmt’s guidance that FY25 is front-loaded due to demand carry-over from FY24. This is partly offset by the expected higher production volume for Pama (+9.2% qoq/ 0.4% yoy) and higher gold price.

Estimates upgrade on higher gold price assumptions

We raise our FY25/ 26F/ 27F net profit estimates by 6.5/ 6.8/4.6% as we adjust our gold price assumptions to US$3,350/ US$3,700/ US$3,400/ oz, though we lower our gold production assumption to 235-240k oz (from 300-350k oz prev.). Mgmt affirms production from Martabe at 220k oz in FY25, with flat volume expectation for FY26-27, and 15-20k oz for SJR. Martabe is currently progressing with the expansion of its tailing facility, targeted to be completed in FY27, and mgmt. is reviewing potential pressure oxidation (POX) plant and studying underground mining potential amid the favorable gold price. UNTR expects to finalize the Doup asset by Dec25, followed by construction of processing capacity of 3mn tonnes, with first gold production slated for FY28 (target of 140-150k oz p.a.). Doup project resource of ~3.1mn oz of gold translates to potentially attractive valuation of US$174/oz for UNTR’s acquisition (US$540mn). Including Doup, UNTR’s gold reserve and resource should total to 5.8 and 10.5 Moz, respectively (Exh. 4).

Raising TP to Rp32,200 on valuation uplift from gold assets; reiterate Buy

We raise our TP to Rp32,200 as we now value UNTR’s gold assets based on domestic gold peers EV/ Resource valuation (exh. 5&6) vs. DCF-based valuation previously, including valuation of Doup asset (net of acquisition cost and estimated capex of US$400mn). We maintain Buy rating on UNTR on steady free cash flow generation and upside from the gold assets. Key risks are production miss from Pama and project execution risks.

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