Bumi Resources Advances Most in Four Months on Debt Payment

PT Bumi Resources, Indonesia’s biggest coal producer, advanced the most in more than four months in Jakarta trading on speculation that a plan to repay debt ahead of schedule will boost earnings. 

Bumi rose 7.1 percent to 3,400 rupiah, the largest gain since Dec. 1 and beating the 0.4 percent increase in the benchmark Jakarta Composite index. (JCI)

The coal producer reported on March 31 a 63 percent jump in profit to $311 million last year, surpassing the mean estimate of $276 million in a Bloomberg survey of 17 analysts. Bumi plans to repay the first tranche of debt to China Investment Corp. in October, Nathaniel Rothschild, co-chairman of Vallar Plc that owns 25 percent of the Indonesian company, said on April 11, without specifying amounts. 

“People’s expectations on Bumi’s earnings have improved,” said Norico Gaman, head of research at PT BNI Securities, who recommends buying the stock. “A debt reduction at the same time as production capacity increases could mean that profit growth in 2011 will exceed that of 2010.” 

Bumi plans to repay early $600 million of debt due October 2013 to the Chinese sovereign wealth fund as part of the company’s aim to cut debt by $1 billion this year, Director Dileep Srivastava said on Feb. 7. 

The coal producer aims to increase output to 111 million metric tons in 2012 from 60 million tons in 2009, the company said in March last year. Sales and prices may rise by at least 10 percent this year, Srivastava said on Jan. 21. 

Bumi has climbed 42 percent in Jakarta trading in the past year, outperforming the 30 percent gain in the main index. Source: Bloomberg