JAKARTA: Shares of PT Bumi Resources Tbk, an Asia's largest coal exporter for power plant, had the biggest decline in 7 weeks after UBS AG lowered stock rating to 'sell'.
Meanwhile, rating agency, Standard & Poor's Ratings Services, did the same thing as it lowered the credit rating of Bumi Resources.
Bumi Resources (BUMI-coded stock) slumped 6.2% to be IDR1,060, yesterday (8/13), the biggest decline since June 25. At the same time, Jakarta Composite Stock (JCI) slipped 0.9%.
According to a research report led by Andreas Bokkenheuser on August 10, UBS cut its estimation on stock price as much as 70% to IDR800.
Meanwhile, the S&P lowered the long-term credit rating of BUMI from BB to BB- with a negative prediction, yesterday, due to weak cash flow and high debt.
According Bokkenheuser, low demand from China power plants represents the risk of short-term coal prices.
Price of coal at the Newcastle port, Australia has fallen 23% this year as China's economic slowdown. In addition, the US and the South African coal producers diverted sales to Asia in the middle of Europe's debt crisis.
"We think China's coal demand will decline slightly after the summer. We expect Bumi will continue to decline in the first quarter of 2012 to 2013 with the current price of coal," said Bokkenheuser.
However, Bumi Resources’s Director Dileep Srivastava is optimistic to reach coal production target of 75 tons this year due to weather condition.
Coal price is predicted to rebound in the end of this year to US$100 per ton and will exceed US$100 in 2013.
Besides, BUMI also plans to settle its tranche 2 debt worth US$600 million in fourth quarter to China Investment Corp., 2 year earlier from the maturity date
BUMI recorded a loss amounting US$100.4 million in first quarter of 2012, compared with a profit of US$108.19 million in the same period last year. (T03/msw)
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