AADI - From Full Steam to Controlled Burn

KBVS Update
Friday, 14 December 2024

AADI – From Full Steam to Controlled Burn
(BUY; TP: IDR 10,500)

FY24 Above Expectations, Record Sales Volume. AADI closed FY24 slightly ahead of estimates, delivering USD5.3 bn in revenue (-10.1% yoy) and USD1.2 bn in net profit (+5.9% yoy), supported by lower royalties and a USD322 mn gain from investment disposal. Sales volume reached a record 68.1 Mt (+7.4% yoy), despite a 16.2% drop in ASP, with Adaro Indonesia (AI) contributing 84.2%.

More Conservative Outlook, Solid Margin Cushion. We revise down our 2025F volume forecast to 65 Mt (-4.5% yoy), resulting in a 25–45% cut to revenue and EBITDA forecasts. Nonetheless, margins remain solid, with EBITDA margin expected to improve to 29–30%. Capex is set to moderate to USD300 mn, while a 50% DPR is maintained, supported by strong free cash flow and healthy liquidity.

Maintain BUY with Revised TP of IDR 10,500/ sh. (prev. IDR14,175) Applying a 5.0x P/E multiple, our TP reflects softer assumptions amid coal price volatility. Sensitivity analysis suggests every 10% swing in coal prices could shift valuation between IDR 8,800–12,100/share. Despite near-term caution, AADI remains a strong dividend play.

Regards,
Laurencia Hiemas – KBVS Research