Jakarta. Due to various supporting factors, mining company Petrosea (PTRO) has very positive prospects for the future. 

The company has a mining contract worth $1.4 billion (around Rp 22 trillion), which accounts for 60 percent of PTRO's total contract backlog in 2023. This contract is mostly medium- to long-term, providing protection against market uncertainties.

Full support from the new controller, Petrindo Jaya Kreasi (CUAN), part of the Barito Group owned by conglomerate Prajogo Pangestu, also strengthens PTRO’s position. This backing has enabled PTRO to secure large contracts in the mining and EPC segments, totaling $1.8 billion (around Rp 28.38 trillion).

The coal sector, which is one of PTRO's main focuses, still shows solid prospects.

Bisman Bakhtiar, Executive Director of the Center for Energy and Mining Law Studies, emphasized that coal prices will remain volatile in the future, but the outlook is quite positive. In the short and medium term, coal will still be needed in large volumes, supporting its price. According to him, factors driving higher coal prices include global geopolitical conditions and increasing demand from major countries such as China, India, and Europe, driven by growing industrial activity in these regions.

"The biggest challenge for coal is the progress of large-scale renewable energy projects and the issue of energy transition. Coal prices are predicted to be around $140 per ton in the future," Bisman recently said. 

He believes that coal will still be needed and is unlikely to be replaced as a primary energy source. This means that coal could still perform well next year. Along with this, he assesses that the coal mining contract business remains solid, especially with established contractors like Petrosea.

"Mining services will continue to be important, and their prospects will align with the direction of coal," he added.

Yoga Ahmad Gifari, an analyst at Sucor Sekuritas, predicts that PTRO’s new contract acquisitions will boost the company’s revenue and profits in the coming years. In the EPC segment, the company is estimated to experience a 152 percent increase in revenue, reaching $747 million.

Meanwhile, revenue from the mining segment is expected to surge by 60 percent, reaching $3.7 billion. According to Yoga, this projected growth will improve PTRO’s leverage compared to its previous position. Notably, the company’s contract base, mostly medium- and long-term, will also help maintain its revenue flow while reducing liquidity risk in the future.

“We estimate the company’s CAGR to grow strongly by 59 percent from 2023 to 2028. This growth has the potential to be the highest among its peers in the industry,” Yoga wrote in his research published on Tuesday, December 11, 2024.

The projected profit growth of PTRO, indicated by the soaring contract volume in the mining segment and additional contributions from the coal sector, aligns with this outlook. According to Yoga, substantial additional contracts could accelerate PTRO’s revenue growth in the future with a higher CAGR than in the past four years.

PTRO’s consolidation into the Petrindo Group ecosystem also opens up extensive opportunities for the company to expand and diversify its business. CUAN, as the parent company, still holds additional unexploited assets such as gold, copper, silver, and silica, which could become new sources of income for PTRO.

“Thus, we see significant potential for PTRO to secure new projects that could drive substantial revenue growth in the future,” added Yoga.

PTRO’s bright future is further reinforced by its solid financial position, enabling the company to expand its business smoothly with strong capital.

As of September 2024, PTRO recorded a debt-to-equity ratio (DER) of 1.0x, well below the 3.5x limit set by lenders. This ratio is expected to decline to 0.7x by 2028, supported by strong profit growth projections and a stable dividend payout policy of 30 percent. 

Recently, PTRO secured a credit facility of $480 million from Bank Central Asia (BBCA) to support its growth initiatives and debt refinancing. PTRO’s interest coverage ratio (ICR) stood at 1.7x in September 2024. With a projected CAGR for operational profit of 37 percent, the company’s ICR is expected to reach 9.5x by 2028.

“We believe liquidity risk for bondholders will be well-managed in terms of liquidity. Given that the existing bank loans have longer maturity, with most of them being over 5 years, this will benefit bondholders,” Yoga said. 

PTRO listed its Sustainable Bond I Phase I and Sustainable Ijarah Sukuk I Phase I for 2024 on the Indonesia Stock Exchange, with a total value of Rp 1.5 trillion (about $93.8 million) on Monday. About Rp 1 trillion were sustainable bonds. The Sharia bond or sukuk ijarah was worth Rp 500 billion. Petrosea’s bonds also came in four series. Series A has a 367-day tenor with a 6.5 percent coupon. Series B has a three-year term and an 8 percent coupon. Series C has a five-year tenor and a coupon of 8.75 percent. Series D has a term of seven years with a coupon of 9.5 percent. Petrosea’s sukuk ijarah also has four series -- A, B, C, and D -- with each offering  100 percent of the remaining ijarah rewards.