BRMS - Significant growth in 2Q24 net profit

KBVS Update
Wednesday, 7 Aug 2024

BRMS- Significant growth in 2Q24 net profits
(Maintain BUY; TP: IDR:236)

Strong net profit growth in 2Q24 despite higher than expected opex. BRMS reported a net profit of USD5 mn in 2Q24, up 56.3% yoy and 50.1% qoq, driven by a 307.9% yoy and 101.4% qoq increase in revenue to USD41 mn. This growth was fueled by higher gold output and increased ASP of gold. However, operating expenses surged by 437.3% yoy and 167.4% qoq to USD10.5 mn. The higher operating expenses were mainly due to increased salary, wages, benefits, and environmental impact analysis costs (amdal) & dead rent (PNBP).

Despite these expenses, BRMS's strong 2Q24 performance contributed to a net profit of USD9 mnin 1H24, a 61.1% yoy increase. However, the overall 1H24 performance was below expectations due to the high opex.

BRMS anticipates announcing new reserves in Blok Poboya and Gorontalo in 2024, which could significantly increase GM's reserves. Currently, CPM's reserve estimate only includes Blok Poboya, with potential additions from four other blocks. This could lead to mid-term reserve growth.

Maintain a bullish stance despite revising our earnings downward. Due to higher-than-expected operating expenses, the earnings forecast for 2024-25 has been revised down to USD26 mn and USD44 mn, respectively. Despite this, a bullish stance is maintained due to a favorable gold price outlook and strong production growth.

We reiterate BUY on BRMS with slightly lower TP of IDR236 using SOTP. BRMS net profit could reach USD121mn in 2029 due to the optimum commercial operation in CPM and GM.

Regards,
Benyamin Mikael - KBVS Research