Monday, September 10, 2012

[KU-223/2012] Bumi Resources Near Bankruptcy, Panin Sekuritas Analyst Says


JAKARTA: An Indonesian giant coal miner will face a financial bankruptcy after recorded loss and has a low capability to settle its debts, said a research issued by Panin Sekuritas.

However, the company is still optimistic on the operational of Bumi Resources.

A research published by Panin Sekuritas published Wednesday (8/29/2012) indicated the coal miner is near bankruptcy as worse financial performance and a failure to repay its debt.

At the same time, the management said the operational performance is still good following the increase in coal sales during the first half of this year.

Financial performance of Bumi Resources (BUMI-coded stock) is reflected from a loss of US$322 million in the first half of this year, reversing a profit of US$232 million in the same period last year.

Based on the research of Panin Sekuritas, the first factor that triggered a bad performance of the company with the largest coal reserves in Indonesia is its profit margin.

"The decline of profit margin was due to the soaring production cost per ton of 9.2%, which was not offset by increasing selling prices," said Fajar Indra, Panin Sekuritas’s analyst in a research.

The second factor, he added, is the high financial burden to be paid, and losses on derivative transactions.

"The financial statement of BUMI recorded an amount of financial burden to be paid which is higher than the company’s profit," he explained.

In addition, the company that 29.2% of its shares are held by Bumi Plc has extended the investment fund of US$231 million at PT Recapital Asset Management. According to Fajar, it has decreased the company’s ability to refinance debt which will mature in 2 years.

BUMI’s total debt to the CIC, headquartered in China was US$600 million for second trance and US$700 million for the next trance.

The bankruptcy projection calculated on some financial ratios in the first half of this year to examine the financial solvency of Bakrie Group’s mining business.

The company initiated by the Bakrie family has a concession in East Kalimantan, with total coal reserves of 2.8 billion tons. Reserves are owned by its subsidiaries, PT Kaltim Prima Coal and PT Arutmin Indonesia.

The performance of the coal mining industry in general during the first half of this year is facing a big challenge due to falling commodity prices and low export demands.

Still optimistic
Responding the bankruptcy projection, Director of Bumi Resources Dileep Srivastava said that it is just a rumors as he is optimistic about the operational performance in the year.

"Our revenues rose nearly 9% and sales rose more than 10% compared to last year," he told Bisnis today (8/29).

Bumi’s coal sales volume in first half of this year reached 32.2 metric tons, or was up 10.2% compared to 29.3 metric tons in the same period in 2011.(T03/aph)

Source : Bisnis Indonesia, 29.08.12.

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