BRMS - Prime Pure-Gold Play

KBVS Update
Thursday, 11 July 2024

BRMS - Prime Pure-Gold Play
(Re-Initiate BUY - TP: IDR256)

Strong sales volume and earnings outlook. BRMS is projected to grow sales volume at a 14.4% CAGR from 2024-2029, driven by higher gold grades from Citra Palu Mineral (CPM), the commercial operation of CPM’s third factory in 4Q24, and the commencement of the Gorontalo Mineral (GM) gold project in 3Q26. We expect in the next 5 years, revenue and earnings to grow at a CAGR of 18.8% and 24%, respectively.

Potential new reserve addition The stated reserve for CPM is solely from Blok Poboya, with the remaining four blocks (Blocks 2, 4, 5, and 6) yet to be valued. Additionally, the commercial operation of the Gorontalo Mineral mine has been delayed by 24 months due to the discovery of copper in the road construction area, which is expected to boost GM's reserves.

Prime Pure-Gold play amid rate cuts and strategic catalysts. Mid-term catalysts include clarity on the a) Dairi Prima operation schedule and b) a solid plan to unlock the copper reserve's potential. We view BRMS as the prime pure-gold play, due to it’s strong and earnings outlook & generation compared with other pure-gold companies. In 2024, we expect BRMS to lead in profit generation among all listed pure-gold producers.

We reinitiate BUY on BRMS with target price of IDR256 using SOTP. BRMS net profit could reach USD144mn in 2029 due to the optimum commercial operation in CPM and GM.

Regards,
Benyamin Mikael -KBVS Research