Sakari Resources Limited (SRL) posted a strong set of 4Q11 results, with revenue jumping 42.4% YoY and 40.4% QoQ to US$312.6m, aided by higher ASPs of coals sold in the quarter. Net profit was up 139.0% YoY and 97.3% QoQ at US$73.0m. For the full-year, revenue climbed 30% to US$1,013.6m, or 7.4% above our forecast, while net profit surged 116% to S$190.3m, or 17.9% above our estimate. Continued production growth at Sebuku will be central to management’s plan in 2012; and SRL remains upbeat about thermal coal demand. Following the strong 4Q11 results and latest output guidance for 2012, we have fine-tuned our estimates. This in turn bumps up our DCF-based fair value to S$2.76 (S$2.06 previously). Coupled with an expected dividend yield of 5%, we upgrade our call to BUY.
Strong 4Q11 results
Sakari Resources Limited (SRL) posted a strong set of 4Q11 results, with revenue jumping 42.4% YoY and 40.4% QoQ to US$312.6m, aided by higher ASPs of coals sold in the quarter. Net profit was up 139.0% YoY and 97.3% QoQ at US$73.0m, as sales of higher-value coal from Sebuku’s Northern Leases helped to lift ASP to US$100/ton. FY11 revenue climbed 30% to US$1,013.6m, or 7.4% above our forecast, while net profit surged 116% to S$190.3m, or 17.9% above our estimate. Meanwhile, SRL is continuing with its policy of paying 60% of its net profit as dividend – this by declaring a final dividend of 5.83 US cents, bringing the total to 10.07 US cents for FY11.
Mining starts at Northern Leases
Sebuku saw coal mined jump 42.6% YoY and 124.3% QoQ to 833k tons in 4Q11; Northern Leases alone contributed 350k tons of product. For this year, SRL further expects Sebuku’s output to increase from 1.8m tons to 2.5m tons; adds that it will be central to its plans for 2012. But Jembayan saw coal mined falling 25.8% YoY and 14.4% QoQ to 1,925k tons. And Jembayan’s output is likely to remain sluggish at 9-9.5m tons this year, versus 8.9m in 2011; but should pick up in 2H12 as new pits come online.
But cash costs could remain high
While management believes that the demand for thermal coal demand looks set for continued growth, it also expects energy prices to remain relatively high, including input fuel prices. As such, cash costs for Jembayan could edge up further from US$57.5/ton in 2011 to above US$60/ton due to elevated strip ratios in 1H12. SRL also expects cash costs for Sebuku to remain around US$40/ton.
BUY with S$2.76 fair value
Following the strong 4Q11 results and latest output guidance for 2012, we have fine-tuned our estimates. This in turn bumps up our DCF-based fair value to S$2.76 (S$2.06 previously). Coupled with an expected dividend yield of 5%, we upgrade our call to BUY.
Sakari Resources Limited (SRL) posted a strong set of 4Q11 results, with revenue jumping 42.4% YoY and 40.4% QoQ to US$312.6m, aided by higher ASPs of coals sold in the quarter. Net profit was up 139.0% YoY and 97.3% QoQ at US$73.0m, as sales of higher-value coal from Sebuku’s Northern Leases helped to lift ASP to US$100/ton. FY11 revenue climbed 30% to US$1,013.6m, or 7.4% above our forecast, while net profit surged 116% to S$190.3m, or 17.9% above our estimate. Meanwhile, SRL is continuing with its policy of paying 60% of its net profit as dividend – this by declaring a final dividend of 5.83 US cents, bringing the total to 10.07 US cents for FY11.
Mining starts at Northern Leases
Sebuku saw coal mined jump 42.6% YoY and 124.3% QoQ to 833k tons in 4Q11; Northern Leases alone contributed 350k tons of product. For this year, SRL further expects Sebuku’s output to increase from 1.8m tons to 2.5m tons; adds that it will be central to its plans for 2012. But Jembayan saw coal mined falling 25.8% YoY and 14.4% QoQ to 1,925k tons. And Jembayan’s output is likely to remain sluggish at 9-9.5m tons this year, versus 8.9m in 2011; but should pick up in 2H12 as new pits come online.
But cash costs could remain high
While management believes that the demand for thermal coal demand looks set for continued growth, it also expects energy prices to remain relatively high, including input fuel prices. As such, cash costs for Jembayan could edge up further from US$57.5/ton in 2011 to above US$60/ton due to elevated strip ratios in 1H12. SRL also expects cash costs for Sebuku to remain around US$40/ton.
BUY with S$2.76 fair value
Following the strong 4Q11 results and latest output guidance for 2012, we have fine-tuned our estimates. This in turn bumps up our DCF-based fair value to S$2.76 (S$2.06 previously). Coupled with an expected dividend yield of 5%, we upgrade our call to BUY.
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