Striking Gold - RHB
• Striking gold. We initiate coverage with a BUY and IDR6,740 TP, implying 35% upside. Our bullish thesis is premised on a strong 62% 2019F earnings growth profile driven by rising gold prices and production ramp-up, unlocking future value from Merdeka Copper Gold’s flagship Tujuh Bukit Porphyry mine (Indonesia’s second-largest copper-gold deposit after Freeport’s Grasberg mine), a strong management team and sponsors – Provident Capital, Saratoga, and Mr Garibaldi Thohir control c.51%.
• Company profile. MDKA is a holding company with a primary business in the mining of gold, copper, and silver. It has four main projects: Two are currently in production stages (the Tujuh Bukit Oxide and Wetar projects), while the remaining two are under the development stages, ie Tujuh Bukit Porphyry and Pani mines. Bukit Porphyry is MDKA’s most valuable mine, as it has Indonesia’s second-largest copper and gold deposits – comparable to Freeport’s Grasberg mine. We expect MDKA to generate 2019 EBITDA and net profit of USD221m and USD85.1m, up 40% and 62% YoY
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