Coal price in delivery contract April 2018 at ICE Futures in the first week of March 2018 touched US$ 102.40 per metric ton. Analysts estimate the shares of the coal mining sector is still prospective.
Vice President of Research and Analysis of Valbury Sekuritas Indonesia, Nico Omer, has predicted that commodity companies including coal producers will still raise production volume in the future. This is in line with the prospect of the commodity sector which he thinks remains promising for the next five years.
“Commodities are always needed. Especially by a number of infrastructure projects undertaken in Asia, “said Nico, Monday (12/3).
Especially for coal, Nico predicts that coal demand will still be maintained. From the domestic market, demand will rise as the government plans to increase the number of coal-based power plants.
From the international market, Nico estimates that demand for coal from China and India will remain high. “At least for the next 10 years,” Nico said.
An analyst at MNC Sekuritas, Sukisnawati Puspitasari, agrees that demand from China will increase. This is in line with the limitation of coal production capacity by China in the period of 2016-2020. When supply is limited, demand from China according to him will not decrease, then the price of coal can rise.
However, Sukisnawati predicts that the increase of this year’s coal price will not be as aggressive as it was last year. It is due to the emergence of renewable energy as a risk factor, not to mention the implementation of the domestic market obligation (DMO) for coal prices.
With these factors, Sukisnawati sets an optimistic target of coal price at US $ 100 per ton and moderate target at US $ 85.88 per ton.
Meanwhile, Nico sees projected coal prices based on oil price movements. If the price of oil drops to US $ 42.50 per barrel, coal prices could fall to US $ 85 per ton or even US $ 70 per ton.
Sukisnawati said the momentum of the high price of coal can be utilized by issuers by maximizing production. “After the maximum production capacity is reached, issuers can switch to find new mining land to be acquired,” She said.
In general, both Nico and Sukisnawati agree that shares of the mining sector, especially coal, are still attractive to be collected.
“The outlook for coal mining in 2018 is overweight,” said Sukisnawati.
Sukisnawati recommends buying shares of PT Indika Energy Tbk (INDY) with a target price of IDR 4,990 in 2018. In addition, she also recommended buying shares of PT Bukit Asam Tbk (PTBA) with a target price of IDR 3,760 this year.
In contrast, Nico prefers the shares of PT Indo Tambangraya Megah Tbk (ITMG) and PT Adaro Energy Tbk (ADRO) as preferred shares.