Bumi Resources, Asia’s largest exporter of thermal coal, is undervalued, a director at the company said, following a recent slide in its share price that last week left it at its lowest since March 2009.
“I’d think we are at least five times undervalued at today’s levels by any yardstick and as we increase output and reduce costs,” Bumi director Dileep Srivastava wrote in an e-mail on Monday.
This year, shares of Bumi, the nation’s biggest coal producer by volume, have fallen 68 percent, making it the second-biggest loser in the 449 companies listed on the Indonesia Stock Exchange (IDX). It dropped 4.1 percent to Rp 700 on Monday.
Bumi trades at 9.1 times this year’s estimated earnings, compared with a multiple of 15 for the benchmark Jakarta Composite Index, accor ding to Bloomberg data.
Some analysts warn that the drop in stock price may make it cheap but there are other concerns. Ruben Sukatendel, who helps manage Rp 6 trillion ($626 million) in assets at BNI Asset Management, said the large debt in the group was unappealing, especially long-term, unless the company can settle its debts.
Dileep denied that the company was facing difficulties.
“I’d say a combination of adverse economic conditions and undue speculation impacts stock price. Most stories about us are unreal,” he said. “Our first-half 2012 financials demonstrate our desire to achieve the highest standards of transparency, adhere to international accounting principles, strengthen our balance sheet and address earlier capitalized expenses.”
Dileep said the company is “engaged in reducing interest costs by seeking cheaper refinancing” and monetizing its non-core assets “for cash to repay company debt.”
Bumi’s debt is estimated at $3.95 billion, including outstanding bonds and convertible bonds, debts to several major lenders, some of which are in China.