PT Golden Energy Mines Tbk, through its subsidiaries, engages in the mining and trading of coal. The company was formerly known as PT Bumi Kencana Eka Sakti and changed its name to PT Golden Energy Mines Tbk in November 2010. The company was incorporated in 1997 and is headquartered in Jakarta, Indonesia. PT Golden Energy Mines Tbk is a subsidiary of Golden Energy and Resources Limited.

Indonesia

PT Golden Energy Mines Tbk

Basic Materials

The company pays dividends on rare occasions. There have only been a few years with dividend payments in the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are unclear. In the past 12 months, the dividend yield has been good and slightly above its peers. At the same time, the average five-year yield has been significantly lower, at very close to zero. The company distributes nearly all its profit as dividends (payout ratio above 90%, a negative factor). It will not be easy to sustain such an extreme payout ratio. It may also indicate a company's lack of profitable growth opportunities, which suggests doubtful prospects. 

GEMS.JK reported revenue of USD 2 706mn in the last 12 months, down 7% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 14% from FY23 to USD 0.08.

The stock's performance has been mixed in the past six months, with growth following a decline. The stock has lagged its global peers from the same sector and industry (as shown above), underperforming then by 10ppts in total. At the same time, the stock's performance relative to its the peers from the same country and sector is different. It underperformed these peers by 19ppts over six months and grew 7ppts slower in the past month. With respect to the stock's valuation against its peers, its overall price performance is neutral.

The company has reported good EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 24.2% in the last 12 months, a decline from 24.2% in FY23. 

Historically, GEMS.JK has reported very strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 17.5%, down from 17.9% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to 67.0%, above the peers. 

PT Golden Energy Mines Tbk reported a return on equity (RoE) of 72.6% in the last 12 months, down from 86.0% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 37.1% in the last 12 months, a decrease from 42.5% in FY23. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 19.4 in the past several years. This ratio implies a excellent shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are close to minimal. In combination with rigorous business standards, shareholder rights are well protected.

GEMS.JK has poor trading liquidity. It will take at least a day or two for the average private investor to sell a common position under normal market conditions. Liquidity is very unstable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. 

No other major risks have been identified.

The risk of default is moderate. We note robust profitability, solid return on capital, strong debt servicing capacity, adequate interest coverage, solid cash flow generation, and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to excessive margin volatility.

In highly turbulent market conditions, GEMS.JK is as volatile as an index. In other words, the stock will move with the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be limited. 

In normal market circumstances, GEMS.JK is as volatile as an index. Put differently, without outstanding market volatility or shocking company news, the stock's price will move with the index. The stock's losses on its worst days (less than 1-5% of the time) will range from low to mild. We would also like to highlight the mild intraday volatility of the instrument. 

Considering past and projected metrics, the stock is 'cheaper' than its peers. Specifically, the stock is 'cheap' on P/E, undervalued on EV/EBITDA, underpriced on P/FCF. 

PT Golden Energy Mines Tbk

IDR 9175

5

PT Golden Energy Mines Tbk

IDR 9175

5

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

IDR 9175

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