United Tractors (UNTR.IJ IDR 23.850 HOLD.IJ IDR 24.900) In-line FY23 net profit; 4Q23 revenue beat largely from coking coal and gold prices

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United Tractors (UNTR IJ)

In-line FY23 net profit; 4Q23 revenue beat largely from coking coal and gold prices

UNTR posted in-line FY23 net profit of Rp20.6tr (96%/ 104% of our/ cons. forecast)
4Q23 earnings improved to Rp5.3tr (+3% yoy/ +27% qoq) but was mainly driven by stronger coking coal and gold prices.
We maintain our FY24-25F est. and Hold rating with unchanged SOTP-based TP of Rp24,900 amid our view of further coal price correction.

Stronger 4Q23 rev. from coal+ gold, but flat/ weak other divisions

UNTR posted 4Q23 net profit of Rp5.3tr (+3% yoy/ +27% qoq), bringing FY23 net profit to Rp20.6tr (-2% yoy, 96%/ 104% of our/ consensus est). 4Q23 earnings improvement were driven by stronger revenues for the coal and gold mining units (combined +51% qoq/ -13% yoy), but with other key divisions posted weaker to flat revenue: heavy equipment -5% qoq/ -12% yoy, mining contracting (Pama) flat qoq yoy/ +5% yoy.

Pama: volume beat in 4Q23; Heavy equipment: aided by better ASPs

Pama’s FY23 revenue of Rp54tr came in better-than-expected (at 108% of FY23 est.), driven by a higher FY23 OB volume of 1.16bn bcm (108% of our FY23 est.), inline fees. Pama’s Jan24 production volume of 89mn bcm and 9.3Mt coal (+9% and +10% yoy) were also in-line with our FY24 expectation. Heavy equipment business posted FY23 revenue of Rp36.6tr (flat yoy, 105% of our est.), reflecting a slight revenue beat from Komatsu while parts and services revenues (+12% yoy) were in-line. Jan24 sales vol of 518 units (-24% yoy) were in-line with management’s FY24 guidance.

Mining: ASPs beat offset slight volume miss in coal/ in-line gold

UNTR’s coal mining unit posted FY23 revenue of Rp30.5tr, a slight beat to our est., driven by higher blended 4Q23 ASP of US$200/t, supported by robust 4Q23 coking coal price which more than offset miss in FY23 volume (FY23: 11.8Mt, 93% of our est.). Similarly, its gold mining’s revenue beat (Rp5.2tr, 109% of our est.) reflected inline FY23 sales vol., but slightly better ASP.

Maintain Hold rating on expectation of further earnings contraction

We continue to expect UNTR’s FY24 earnings to contract amid expectation of further thermal coal price normalization. Thus, we maintain our FY24-25 est and Hold rating on UNTR with an unchanged SOTP-based TP of Rp24,900. Key upside risk to our call is stronger coal price, while key downside risk is lower mining fee and heavy equipment sales.

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