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PT Adaro Minerals stock forecast: Shares in Indonesian coal miner ADMR were world’s best performer in 2022 - can they keep going?

By Mensholong Lepcha

Edited by Jekaterina Drozdovica

17:48, 20 December 2022

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PT Adaro Minerals stock forecast
Adaro Minerals was the world’s best-performing stock, rising as much as 2,225% in 2022. – Photo: Shutterstock; Masmikha

Indonesia’s Adaro Minerals (ADMR) was the world’s best-performing stock in 2022. The coal miner rode an initial public offering (IPO) wave in the Asian nation, rising over 2,000% by April 2022.

Despite falling off peak levels, Adaro Minerals stock remained more than 1,000% above its listing price, as of 20 December.

What does the future hold for Adaro Minerals? Here we take a look at what factors are shaping the latest PT Adaro Minerals stock forecast for 2023 and beyond.

What is PT Adaro Minerals Indonesia? 

PT Adaro Minerals Indonesia Tbk is a metallurgical coal mining company based in Indonesia. It is the only hard-coking coal (HCC) producer in the Asian nation.

HCC is a premium type of coking coal which is solely used for steel production.

Adaro Minerals has five units operating five coal contract-for-work (CCOW) concession areas in Indonesia's East Kalimantan and Central Kalimantan provinces. 

According to its annual 2021 report, the company has also established an aluminium processing unit.

Adaro Minerals went public on the Indonesia Stock Exchange in January 2022 under the ticker ADMR. PT Adaro Energy Indonesia (ADOOY) was the biggest shareholder of Adaro Minerals with a stake of over 68%, as of December 2021.

PT Adaro Energy Indonesia live stock price

The company raised about $44.7m after expenses from selling 16.2% of its shares in a public listing. According to the company, it used 46% of the IPO proceeds for loan repayments and 54% for funding capital expenditures.

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ADMR stock price analysis: World’s best performer in 2022

Adaro Minerals enjoyed a stellar debut year in the stock market. The Indonesian mining company emerged as the world’s best-performing stock in 2022, having gained as much as 2,225% from an open price of IDR135 to an all-time high of IDR3,140.

The stock debuted on the Indonesia Stock Exchange on 3 January 2022 at IDR135. By the end of its first week as a publicly-listed company, Adaro Minerals had nearly tripled its price to close at IDR380.

PT Adaro Minerals stock price

The ADMR stock price closed the month of January 2022 at IDR1270 – an increase of 840% from its listing price.

As commodity prices surged following the outbreak of the Russia-Ukraine war in February 2022, coal prices scaled multiple record highs. The sky-high coal prices buoyed Adaro Minerals shares to an all-time high of IDR3,140 by 20 April 2022.

“Russia is the third largest coal exporter in the world and the sanctions have as a result given rise to a reshuffling of global trade flows as buyers, especially in Europe, seek alternative supplies,” noted the International Energy Agency (IEA).

Adaro Minerals’ shares have eased since then. It saw profit-taking in May and June as the ADMR stock price posted back-to-back monthly losses of over 18% and over 29%, respectively.

The stock traded range-bounded between a low of IDR1,455 and a high of IDR2,050 between July and December 2022.

As of 20 December, PT Adaro Minerals stock was trading at IDR1,645, about 47% below its all-time high. In year-to-date terms, the stock was up 1,118% based on its 20 December closing price.

Fundamental analysis: Steady growth 

A fundamental study of company earnings is important for stock market research and for constructing ADMR stock forecasts.

The company’s 2021 annual report showed strong growth in revenue over the past three years, growing from $109.2m in 2019  to $460.2m in 2021. The revenue growth also helped Adaro Minerals turn around its business from a net loss of $28.5m in 2020 to a net income of $156.7m in 2021.

Net debt – calculated as total interest-bearing debt minus cash and cash equivalent – increased from $405.9m to $452.9m between 2019 and 2021. While data showed that Adaro Minerals drastically cut down on its capital expenditure (CAPEX) from $171.4m in 2019 to $11.3m in 2021.

The company more than doubled its coal production from 1.09 metric tonnes in 2019 to 2.30 metric tonnes in 2021.

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Sales volume mirrored production growth as it climbed from 0.98 metric tonnes in 2019 to 2.30 metric tonnes in 2021. Adaro Minerals said China contributed 61% of its metallurgical coal export in 2021, while Japan accounted for 37% in the same period. Only 2% of the company’s sales volume led to domestic end-users in 2021.

The firm’s dividend policy stated a 45% payout to shareholders if the company generates profit in the fiscal year.

Bumper earnings in 2022

Adaro Minerals followed its 2021 financial performance with strong earnings and production growth in 2022, which has supported its share price.

The coal miner reported a 188% year-on-year jump in net revenue to $666.5m for the nine-month period ending 30 September. Coal production jumped to an all-time high volume of 2.56 metric tonnes in the nine-month period, up 48% from a year ago.

Core earnings for the period surged by 456% to $291.6m from $52.4m reported a year ago on the back of “historically high prices” for coal.

The earnings windfall took cash levels up by 434% to $401.8m by the end of September 2022. As a result, net debt fell by 73% year-on-year to $159.7m from $594.6m.

Interest-bearing debt lowered by 16% year-on-year to $561.5m from $670m reported a year ago.

Aluminium foray

In the latest report, Adaro Minerals reiterated its commitment to be a “leader of the transformation within the Adaro Group” in its nine-month earnings press release. The company announced plans to break ground on its aluminium project in Kaltara, Indonesia, in 2023. 

Later on 13 November 2022, Adaro Minerals announced a memorandum of understanding deal with South Korean automaker Hyundai Motor (HYMTF). According to the deal, Adaro Minerals will supply aluminium produced by its unit PT Kalimantan Aluminium Industry to Hyundai Motor.

Christian Ariano Rachmat, president director of PT Adaro Minerals Indonesia, commented:

“With the support from all our stakeholders and Hyundai Motor Company who has the track record, experience, and cutting-edge technology on electric vehicles, we hope to achieve Commercial Operation Date by the first quarter of 2025 and produce 500,000 TPA aluminium in initial stage.”

PT Adaro Minerals stock forecast for 2023 and beyond

Coal prices are crucial for PT Adaro Minerals share price forecasts. As of December 2022, coal prices and demand were past their peak and without tailwinds to challenge record-high prices.

In October, Adaro Minerals noted the weakening of the steel industry in China – the world’s largest producer and consumer of steel – due to the ongoing crisis in the nation’s property sector and strict zero-Covid protocols.

As a result, the September 2022 quarter saw weak coke production and lower metallurgical coal consumption, said Adaro Minerals. The company also noted reduced steel output from Japanese steel producers in its nine-month earnings press release.

Demand for coal could be key in shaping the PT Adaro Minerals stock forecast for 2025. IEA projected global coal demand plateaus around the 2022 level of 8 billion tonnes through 2025.

“Developments in China may well have the largest impact on the outlook for global coal demand since China accounts for more than half of it,” added the IEA.

The IEA noted the increased usage of coal for power generation in Europe in 2022 due to the ongoing energy crisis on the continent. However, the agency called Europe’s U-turn on coal “temporary”, adding that “redoubled efforts to improve energy efficiency and expand renewables will see EU coal generation and demand return to a downward trajectory as soon as 2024 in our forecast.”

Japanese investment firm Nomura issued a PT Adaro Minerals stock prediction, rating the stock a ‘buy’, setting a target price of IDR2,200. It said:

“Considering the several factors that could potentially volatilize coking coal price, we conservatively assume coking coal price at USD250/t /USD200/t for FY22F/23F, and to stabilize thereafter at USD175/t. ADMR benefits from abundant reserves & premium quality coking coal.”

According to a PT Adaro Minerals share price forecasts compiled by investing.com, three out of three analysts covering the stock rated it ‘outperform’ with an average target price of IDR2,483, as of 20 December 2022.

When looking for ADMR stock forecasts, it’s important to bear in mind that analysts’ forecasts can be wrong. We encourage you to always conduct your due diligence by reading the latest news, conducting technical and fundamental analyses, and studying a wide range of economic commentary. 

Remember, your decision to trade should depend on your attitude to risk, your expertise in the market, the spread of your portfolio and how comfortable you feel about losing money. You should never trade more than you can afford to lose.

FAQs

Is PT Adaro Minerals a good stock to buy?

You should always conduct your due diligence before trading by reading the latest news, conducting technical and fundamental analysis, and analysing macroeconomic commentary. When looking for ADMR stock forecasts, it’s important to bear in mind that analysts’ forecasts can be wrong. You should never trade more than you can afford to lose.

Will PT Adaro Minerals stock go up?

According to PT Adaro Minerals share price forecasts compiled by investing.com, three out of three analysts covering the stock rated it “outperform” with an average target price of IDR2483, as of 20 December 2022. It is important to bear in mind that analysts’ forecasts can be wrong. 

Should I invest in PT Adaro Minerals stock?

The decision to invest in an asset is yours alone. Remember to conduct your due diligence before trading by reading the latest news, conducting technical and fundamental analysis, and analysing macroeconomic commentary. The decision to trade should depend on risk tolerance, market expertise, portfolio spread and more. You should never trade more than you can afford to lose.

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