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Why Invest in Adaro?

The Power of Positive Energy


Each time we ship Envirocoal, the cleanest thermal coal available on the export market, on schedule and as ordered to our loyal customers, we deliver positive energy.

In the passionate work of each of our employees, in the way we conduct ourselves, in the impact that we have on those around us and in the contributions we make to society, we deliver positive energy.

As we turn a non-renewable resource into a renewable one by building strong, healthy communities surrounding our operations, as we create maximum sustainable value from Indonesian coal, we deliver positive energy.

Here are eight core reasons to believe in us:

In the 25 years of operations, the Adaro Group had transformed from a single-site coal mining company of 1 Mt into producing more than 50 Mt of coal and being one of Indonesia’s largest integrated coal and energy producers.

The integrated business model is unique to Adaro Energy, which sets us apart from our competitors and is proven to be resilient throughout coal cycles, with the non-coal mining businesses providing a solid earnings base to counter the volatility of coal. Over the years, contribution from the non-coal mining businesses to our EBITDA has continued to increase and reached approximately 20% in 2017, affirming that Adaro Energy is more than a mere coal mining company.

Our business transformation into eight growth pillars will further strengthen our foundation for sustainable growth and provide a competitive position for the longer term. We are committed to continue developing these pillars to build a more resilient and competitive Adaro Energy.
 

Coal is in the DNA and remains as the backbone of Adaro Energy. We are one of the largest suppliers to the seaborne market with annual production of more than 50 Mt. Following the acquisition of Adaro MetCoal Companies, we have further diversified our product portfolio from sub-bituminous thermal coal suitable for power generation to metallurgical coal, a rare and specialty product and an essential component in steel making.

Our thermal coal assets range from low CV coal below 4,000 kcal/kg to medium CV coal of 5,000 kcal/kg (gross as received / GAR). We have metallurgical coal assets across the spectrum from semi-soft coking coal to premium hard coking coal. The product diversification further strengthens our position in the coal industry and we have low-cost options for future growth and value creation from all of these coal mining assets, which will provide us with more flexibility and new opportunities in growing our coal mining business.

Our main thermal coal products, widely known under the registered trademark Envirocoal, are well-established in the market and are among the lowest globally for ash, sulfur, and nitrogen content. The coal has been widely used throughout Europe, Asia and the Americas for use in industrial centers where environmental restrictions are stringently controlled or as a blending coal with more common high ash, high sulfur coals. Currently, we sell five different types of Envirocoal from our South Kalimantan concessions with CV from 4,000 kcal/kg to 5,000 kcal/kg (GAR).

Envirocoal’s rare qualities help coal-fired power plants reach environmental emissions standards, thus establishing a competitive position and market demand for the product. Envirocoal also provides excellent economic and technical benefits through lower maintenance and operating costs, and the improved combustion, ash handling and ash disposal efficiencies have made it the most environmentally acceptable and cost effective solid fuel available.
 

Our discipline to repay debts, preserve cash and maintain efficient operations has enabled us to deliver on our financial guidance and achieve unprecedented financial performance in 2017. We generated strong free cash flow on the back of robust operational EBITDA and meticulous capital spending, and achieved net cash position for the first time since our IPO.

Our Operational EBITDA increased 47% to US$1,315 million, higher than 2017 Operational EBITDA guidance, on the back of higher average selling price and our relentless effort to improve productivity and efficiency along the coal supply chain. Of this, 20% was contributed by non-coal mining businesses. Our operational EBITDA margin of 40.4% was also one of the best among our peers. The strong financial results show that our balance sheet is prepared to drive the future development of our business and provide us with ample flexibility in navigating through market uncertainties.

 

Indonesia currently has ~60 GW of electricity installed, roughly half of which is coal fired. The country expects an additional 35 GW of capacity, of which 20 GW is coal fired. Research from IHS Markit shows 300 GW of new coal-fired power plants are under construction in Asia today. We are a firm believer on the Asia growth story and expect Southeast Asia to be one of the key growth drivers while traditional markets in Japan, South Korea and Taiwan will continue to be significant consumers of coal.

Most of these new coal-fired power stations use super critical or ultra-super critical boiler technology, and our coal, with its ultra-low pollutant content, fits nicely with the specific requirements of these boilers. Our proximity to major pockets of growth in Asia also offers benefits in terms of freight and transportation costs.

 

Since going public in 2008, Adaro Energy has experienced the rough cycles of the industry but never have we compromised our commitment to pay dividend to our shareholders. We have cumulatively paid a total of US$1.1 billion in dividends with average payout ratio of 38%.

Our focus is to create long-term value for all of our shareholders who have been very supportive to us in our endeavors to create maximum sustainable value from the Indonesian coal, energy and infrastructure sectors. Adaro Energy is committed to pay cash dividend each year and as a result we deliver among the best dividend yield in the country’s coal mining sector. We will remain disciplined to ensure the balance between the money reinvested into the business to capitalize growth opportunities and the returns distributed to shareholders.

 
Last modified on April 19, 2018, 8:17 pm | 52280