BUY SAKARI, Moving up fast & furious 2 May 2012

[bluetooth]

Last Retrieved on Wed, May 02 2012 at 09:54 AM

Price	Trades	Volume	Sold to Buyer	Mid	Bought from Seller
1.940	7	50,000	50,000	0	0
1.945	53	157,000	29,000	0	128,000
1.950	43	154,000	30,000	0	124,000
1.955	74	347,000	0	0	347,000
1.960	19	71,000	15,000	0	56,000
1.965	42	162,000	38,000	0	124,000
1.970	23	126,000	10,000	0	116,000
1.975	19	47,000	3,000	0	44,000
1.980	12	41,000	11,000	0	30,000
1.985	35	119,000	32,000	0	87,000
1.990	42	127,000	16,000	0	111,000
1.995	16	58,000	12,000	0	46,000
2.000	12	57,000	0	0	57,000
2.010	38	192,000	75,000	0	117,000
2.020	66	431,000	116,000	0	315,000
2.030	49	350,000	219,000	0	131,000
2.040	21	101,000	17,000	0	84,000
TOTAL	571	2,590,000	673,000	0	1,917,000

Weighted Avg Price : 1.9894 Avg Trade Size : 4,535.902 Spread/Price Ratio : 0.0099

[bluetooth]

Sakari Resources: S$1.97 BUY (TP: S$2.50)

Expect progressively better results

Within expectations, expect improved performance in coming quarters. 1Q12
PATMI of US$14m (-66% YoY, -80% QoQ) came in within our expectations and
accounted for 8% of our full year estimate. Weak earnings were mainly due
to lower production and higher costs from Jembayan, coupled with declining
coal prices. We believe the market has largely priced-in a weaker 1H12 for
SAR and the counter looks attractive to accumulate at current levels.
Maintain BUY, with TP of S$2.50 based on 12.8x FY12 P/E.

Jembayan to perform better in 2H12. Jembayan brought forward the
developments of two new pits during 1Q12, instead of during 2H12, and this
resulted in a 40% YoY dip in 1Q12 production to 1.5m tonnes, while cash
costs rose 40% YoY to US$67.5/tonne. Coupled with declining coal prices
(Newcastle coal prices are down 9% YTD to US$102/MT), this inevitably
affected profits negatively. We remain positive on management’s strategy to
ensure added capacity for an expected market recovery later in the year,
with Jembayan positioned to benefit from expected higher coal prices,
higher volumes, and lower costs.

Sebuku steady as she goes. 1Q12 production grew 32% YoY to 519k tonnes,
while cash costs fell a marginal 1% to US$42.5/tonne. As expected,
production levels were not near the stellar 758k tonnes recorded in 4Q11.
However, we are expecting production to pick up, and with management
lifting its FY12 Sebuku production target to not less than 2.5m tonnes, we
see potential upside risks to our FY12 Sebuku production forecast of 2.5m
tonnes.

Valuations attractive, negatives priced in. SAR remains attractive trading
at 10x FY12 P/E with dividend yield of 5.9%. Our TP of S$2.50 is based on
12.8x FY12 P/E, which is a 27% premium to SAR’s peers. Downside risks to
our call include lower than expected coal production and adverse macro
conditions leading to a down trend in coal prices

[bluetooth]

OCBC research
Sakari Resources: Poor 1Q12 results; improvement expected
Sakari Resources Limited (SRL) reported 1Q12 revenue slumping 16% YoY to US$188.8m, or just 17% of our full-year forecast, mainly due to sharply lower coal production volume. Net profit tumbled 65% YoY to US$14.5m, meeting just 7% of our FY12 estimate. But management notes that there were several operational factors which affect its performance and things should start to normalise over the year. As such, it remains relatively confident that it can post a recovery from 2Q12 onwards. But we still need to cut our FY12 estimates for revenue by 11% and earnings by 41% (FY13 by 4% and 17% respectively). This in turn lowers our DCF-based fair value to S$2.39. But in view of the likely improvement from 2Q12 onwards, we maintain our BUY rating. (Carey Wong)