Jakarta. Petrosea, known by its ticker symbol PTRO, is expected to reap the benefits of the government’s decision to increase domestic coal production.

Indonesia wants to produce 922 million tons of coal annually, growing by 20 percent throughout 2024-2026. Sucor Sekuritas Analyst Yoga Ahmad Gifari said the higher coal output could benefit PTRO as the leading mining contractor could secure more contracts in the future. The company’s market share expansion is also in line with the gradual growth of coal production and new contracts that PTRO has secured this year.

"We project that the company can increase its market share in the industry driven by the gradual increase in coal production from the three new contracts secured this year," Yoga recently said.

Those said three deals included contracts that also involved Berau and Pasir Bara Prima. 

PTRO and BP Berau had signed a contract for early land engineering work and EPC (engineering, procurement, and construction work) for the Ubadari project. The contract also revolves around the Tangguh project on enhanced gas recovery for carbon capture, utilization, and storage and the Tangguh onshore compression (UCC). The deals were worth $302 million or around Rp 4.91 trillion.

Petrosea also signed a mining service contract with Pasir Bara Prima. The deal is worth around $511 million or Rp 8.3 trillion. PTRO has also signed a $230 million or Rp 3.73 trillion mining service agreement with Global Bara Mandiri. The deal will last for eight years but can be extended to a life-of-mine contract.

“We estimate that the company’s profit CAGR [compound annual growth rate] will grow strongly by 59 percent from the 2023 figures to 2028. This is driven by a 22 percent revenue CAGR and margin expansion, especially in the coal division,” Yoga said.

The mining contractor revenue is also expected to boast an up to 20 percent CAGR. The CAGR of the coal mining sector will continue to grow significantly by 101 percent supported by a gradual increase in coal production.

"We project a CAGR of 19 percent in the EPC segment driven by new contracts from the Barito Group, existing clients such as Freeport, and new external parties," Yoga said.

According to Yoga, PTRO will also be able to take advantage of synergies with its new owner through participation in projects from other companies in the Barito Group such as Chandra Asri Pacific (TPIA), Barito Renewables Energy (BREN), and Barito Pacific (BRPT). The synergy will improve PTRO's operating margin by a margin of around 11 percent in 2028. This margin is higher than that of 2023 which was 6 percent, a growth that Yoga attributed to the coal division.

"We assume that PTRO's cash costs will gradually decrease to $35 per ton for PTRO's coal mining segment in the next five years. This figure is smaller than the predicted $55 per ton in 2024," Yoga said.