Equity Research

BRPT Visit Note

Friday, 29 September 2017

Not Rated Barito Pacific (BRPT)

Heating Up
Last price (IDR) 2,050 Yesterday we visited the geothermal power plant at Salak mountain which
has installed capacity of 377MW. This is one of three geothermal power plants
in the portfolio of Star Energy Holding Pte Ltd (Star Energy). BRPT intends to
acquire a 66% stake in Star Energy by 1Q18. The planned acquisition is part of
BRPT's strategy to increase its revenues contribution from the energy
segment. Using the consensus net profit target, BRPT currently trades at 15.8x
Stock Statistics
2018F P/E.
Sector Petrochemical
Bloomberg Ticker BRPT A brief on the transaction to acquire Star Energy
No of Shrs (mn) 13,960 On 20 December 2016, BRPT acted upon a MoU to acquire a 66.67% stake in
Star Energy from Star Energy Investment and SE Holding Limited. BRPT is
Mkt. Cap (IDR bn/USDmn) 28,617/2,117
currently conducting due diligence related to this transaction and expects the
Avg. daily T/O (IDR bn/USDmn) 63.3/4.7 assessment to be completed by the end of this month. As such, the acquisition
process is expected to be completed by 1Q18. Although the value of the deal
Major shareholders
has not been disclosed, we estimate that it is around USD700mn. Our estimate
Magna Resources Corp. (%) 52.1 is based on the acquisition of a 33.3% stake in Star Energy in April 2017 for
Estimated free float (%) 37.4 USD357mn by BCPG (a Thailand-based energy company).

Star Energy: one of the largest geothermal power plant players in Indonesia
Star Energy has three geothermal power plants in Indonesia with total installed
capacity of 875MW. This is 51.5% of the total installed capacity of geothermal
power plants in Indonesia of 1,698MW. Its geothermal portfolio assets include:
(i) the Darajat power plant located in Garut, West Java, which has installed
capacity of 271MW, (ii) the Wayang Windu power plant located in Bandung,
West Java, which has installed capacity of 227MW, (iii) the Salak power plant
located in Sukabumi, West Java, which has installed capacity of 377MW.
BRPT relative to JCI Index
The Salak geothermal power plant
BRPT IJ (LHS) Relative to JCI Index (RHS) Located in the Salak national park, the Salak geothermal power plant
2,500 390 commenced its first commercial production in 1982 with initial capacity of
2,000
340 110MW. In 1997, the Salak power plant expanded its installed capacity to
290
377MW and maintained this level of capacity up to now. The power plant
240
1,500
190
consists of 6 production units with the first 3 units located in the western part
1,000 140
of the national park. They are operated by Indonesia Power (a subsidiary of
500
90 PLN). The last 3 units are located in the eastern part of the national park and
40 they are operated by Star Energy. Currently, the utilization rate for the power
0 -10 plant stands at 91%. The steam which is needed to operate the power plant is
Nov-16
Sep-16

Feb-17

May-17
Oct-16

Aug-17
Jun-17

Jul-17
Apr-17
Mar-17
Dec-16

Jan-17

sourced from 46 active wells. All the electricity produced by units 4-6 are sold
to PLN with a contracted price of USDc7/kWh. Although units 1-3 are not
Source : Bloomberg
operated by Star Energy, Star Energy is the sole supplier of the geothermal
energy to these units.

Antonia Febe Hartono, CFA Key Financials

(62-21) 29 555 888 ext.3504 Year to Dec 2013A 2014A 2015A 2016A 1Q17A
[email protected] Revenue, USD mn 2,519 2,477 1,406 1,961 643
EBITDA, USD mn 86 111 67 501 170
EBITDA growth, % 661.4% 28.4% -39.9% 651.7% 178.2%
Net profit, USD mn (26) (8) (5) 132 49
EPS, USDcent (0.0) (0.0) (0.0) 0.2 0.1
EPS growth, % -72.2% -67.2% -36.9% -2559.5% 304.8%
BVPS, USDcent 1.0 1.0 1.0 0.8 0.8
DPS, USDcent - - - - -
PER, x (468.5) (1,402.1) (2,004.1) 83.4 227.0
PBV, x 1.8 1.7 1.6 1.9 2.0
Dividend yield, % - - - - -
EV/EBITDA, x 16.1 11.6 16.9 2.5 7.8
www.danareksa.com See important disclosure at the back of this report 1
Source : Company
 Production process at the geothermal power plant
To generate electricity, the geothermal power plant uses steam which is sourced
from production wells. The drilling of production wells excerpts steam and brine
(hot water). To separate the steam from the brine, a separator is installed in the
geothermal power plant. While steam is transferred to the scrubber, the brine is
transferred to injection wells. In the scrubber, the steam is cleaned before going
into the turbines to generate the electricity. From the turbines, the steam is
discharged to a condenser to lower the steam temperature. Meanwhile, the
electricity produced is transferred to a transformer to increase the electricity
voltage and subsequently the electricity is transmitted to PLN.

Exhibit 1. Geothermal production process

Brine and steam are extracted from the production well Steam and brine are separated in the Separator

Steam is cleaned in the Scrubber Electricity generated from turbines

are discharged to transformer

From transformer electricity is Steam is transferred to condenser

transferred to PLN by using transmission

Source : Danareksa Sekuritas

www.danareksa.com See important disclosure at the back of this report 2

Exhibit 2. Salak geothermal power plant Exhibit 3. Drilling maket

Source : Danareksa Sekuritas

More corporate actions: right issues to finance the Star Energy acquisition
To finance the Star Energy acquisition, BRPT will use the proceeds from bank
loans, internal cash, and rights issue. In December 2016 and March 2017, BRPT
drew down loans of USD250mn to fund the advanced payment for the Star
Energy acquisition. For the rights issue, BRPT plans to conduct this corporate
action by 1Q18.

Exhibit 4. Income Statement

Year to Dec (IDR bn) 2013A 2014A 2015A 2016A 1Q17A
Revenue 2,519.0 2,476.9 1,406.1 1,961.3 642.5
COGS -2,431.4 -2,366.9 -1,267.0 -1,473.9 -466.4
Gross profit 87.6 109.9 139.1 487.5 176.1
EBITDA 86.4 111.0 66.7 501.5 170.4
Oper. profit 8.2 32.5 64.6 408.2 147.1
Interest income
Interest expense -28.9 -38.2 -28.5 -38.2 -11.9
Forex Gain/(Loss) -7.7 -4.2 -10.3 0.0 2.1
Income From Assoc. Co’s 0.0 4.1 -4.5 -5.4 0.2
Other Income (Expenses) 14.0 11.1 13.5 16.7 1.0
Pre-tax profit -14.4 5.2 34.7 380.0 138.4
Income tax -6.3 -6.4 -29.7 -100.2 -35.8
Minority interest -5.1 -7.3 -10.4 -148.1 -53.6
Net profit -25.9 -8.5 -5.4 131.7 48.9
Core Net Profit -18.1 -4.3 5.0 131.7 46.9

www.danareksa.com See important disclosure at the back of this report 3

 Exhibit 5. Balance Sheet
Year to Dec (IDR bn) 2013A 2014A 2015A 2016A 1Q17A
Cash & cash equivalent 269.2 218.9 105.2 306.4 307.0
Receivables 182.1 101.3 52.9 141.5 211.7
Inventory 295.8 222.7 183.3 202.4 207.1
Other Curr. Asset 106.8 137.4 94.2 68.1 139.3
Fixed assets - Net 1,287.8 1,437.7 1,587.3 1,584.7 1,584.9
Other non-curr.asset 179.4 372.5 1,131.6 1,605.7 1,868.1
Total asset 2,321.1 2,490.6 3,154.6 3,908.7 4,318.1

ST Debt 71.3 73.1 129.3 133.4 233.1

Payables 549.5 410.3 263.7 366.9 348.3
Other Curr. Liabilities 12.1 23.4 65.5 124.0 251.0
Long Term Debt 340.4 473.4 475.2 403.6 452.0
Other LT. Liabilities 290.7 596.7 1,413.1 1,754.6 1,639.9
Total Liabilities 1,263.9 1,576.8 2,346.8 2,782.6 2,924.2
Shareholder'sFunds 714.9 705.2 714.4 841.7 895.4
Minority interests 342.3 346.1 481.2 606.6 660.1
Total Equity & Liabilities 1,057.1 1,051.3 1,195.7 1,448.4 1,555.5

Exhibit 6.Cash Flow

Year to Dec (IDR bn) 2013A 2014A 2015A 2016A 1Q17A
Net income -25.9 -8.5 -5.4 131.7 48.9
Depreciation and Amort. 78.2 78.5 2.1 93.2 23.3
Change in Working Capital 42.7 -13.4 83.8 211.6 -20.7
OtherOper. Cash Flow
Operating Cash Flow 95.0 56.6 80.5 436.5 51.6

Capex -89.8 -201.0 -268.4 -76.8 -198.3

Others Inv. Cash Flow -33.3 -15.9 23.5 -58.6 1.8
Investing Cash Flow -123.1 -216.9 -244.9 -135.3 -196.5

Net change in debt 24.7 129.5 63.4 -69.2 145.4

New Capital 127.6
Dividend payment
Other Fin. Cash Flow (1.4) (19.5) (12.7) (30.7) -
Financing Cash Flow 150.9 109.9 50.6 -100.0 145.4

Net Change in Cash 122.8 -50.3 -113.7 201.2 0.6

Cash - begin of the year 146.4 269.2 218.9 105.2 306.4
Cash - end of the year 269.2 218.9 105.2 306.4 307.0

www.danareksa.com See important disclosure at the back of this report 4

 Exhibit 7. Key Ratios
Year to Dec 2013A 2014A 2015A 2016A 1Q17A
Growth (%)
Sales 0.1 0.0 -0.4 0.4 0.8
EBITDA 6.6 0.3 -0.4 6.5 1.8
Operating profit -1.1 2.9 1.0 5.3 2.6
Net profit -0.7 -0.7 -0.4 -25.6 3.0
Profitability (%)
Gross margin 3.5 4.4 9.9 24.9 27.4
EBITDA margin 3.4 4.5 4.7 25.6 26.5
Operating margin 0.3 1.3 4.6 20.8 22.9
Net margin (1.0) (0.3) (0.4) 6.7 7.6
ROAA (1.1) (0.3) (0.2) 3.4 1.1
ROAE (3.6) (1.2) (0.7) 15.6 5.5
Leverage
Net Gearing (x) 0.6 0.8 0.8 0.6 0.8
Interest Coverage (x) 0.3 0.3 0.4 0.1 0.1

Source : Company

www.danareksa.com See important disclosure at the back of this report 5