Introduction
United Tractors (UNTR), a leading player in distributing and leasing construction machinery, continues to maintain its significant role in Indonesia’s energy and mining sectors. UOB Kay Hian’s latest report dives deeply into the company’s performance, financial projections, operational updates, and market outlook for 2025. Investors are guided on the current position of United Tractors with a “HOLD” recommendation and an updated target price of Rp30,000.
Stock Overview and Performance
United Tractors trades under the ticker UNTR IJ and is listed in the energy sector. As of the report date, the stock price stands at Rp26,175, with a notable market capitalization of Rp97,636.3 billion (US\$5,962.5 million). The stock’s 52-week high and low are Rp28,500 and Rp20,925, respectively. Over the past year, the stock has experienced a modest 6.4% increase, though it recorded a slight YTD decline of 2.2%.
The company’s major shareholder, Astra International, holds a commanding 59.5% stake. United Tractors’ FY24 NAV per share is projected at Rp21,549, while its FY24 net debt per share is estimated at Rp2,794.
Operational Highlights
Komatsu Sales and Heavy Equipment
United Tractors has provided robust guidance for Komatsu unit sales in 2025, projecting a rise to 4,600 units compared to an expected 4,350 units in 2024. Of these, 1,500 units are anticipated to be large units. Scania and UD Truck sales are expected to grow by 10-20%, with Scania targeting 400 units and UD Trucks aiming for 230 units. However, spare part sales are anticipated to remain flat year-on-year.
Mining Operations
The mining division, led by Pama Persada, expects a modest 2-3% increase in overburden removal, reaching 1.25 bcm in 2025 from 1.2 bcm in 2024. Coal delivery volumes are projected to rise to 150 million tonnes, up from 147 million tonnes in 2024. Importantly, the loss of windfall bonuses is not expected to significantly impact the company’s performance as long as coal prices remain above US\$120/tonne. The mining contracting rate is stable at US\$2-3/tonne.
Gold Production
Gold production is forecasted to increase slightly from 235,000 t.oz in 2024 to 240,000 t.oz in 2025. The Martabe mine is expected to contribute 220,000 t.oz, while the Sumbawa gold mine will add another 20,000 t.oz. The tailing storage adjustment at Martabe is yet to be completed.
Coal Production
United Tractors projects 3.4 million tonnes of coking coal and 7.3 million tonnes of thermal coal production in 2025. Of the thermal coal volume, 3.3 million tonnes will come from trading. The benchmark coal price assumption for 2025 is set at US\$130/tonne, slightly lower than the US\$136/tonne average in 2024.
Nickel Refining Facility (RKEF)
The RKEF facility at Stargate, with an investment of US\$160 million, is expected to commence operations in the second half of 2025. It will produce 13,000-14,000 tonnes of nickel pig iron (NPI) annually at a 75% grade. The selling price is projected at 75% of the London Metal Exchange (LME) nickel price, with production costs estimated at US\$11,000/tonne.
Financial Forecasts
United Tractors’ net profit after tax (NPAT) for 2025 is expected to remain flat year-on-year, with a slight decline of 0.7%, amounting to Rp19,593 billion. Key financial metrics for 2025 include:
- Net turnover: Rp140,624 billion
- EBITDA: Rp35,204 billion
- Operating profit: Rp27,806 billion
- EPS: Rp5,252.6
- PE ratio: 5.0x
- Dividend yield: 12.5%
Despite the slight decline in NPAT, the company is expected to maintain a solid ROE of 22.3% and a stable net margin of 13.9%.
Renewable Energy and Power Investments
Coal-Fired Power Plant
United Tractors’ 25% ownership in the Tanjung Jati 2×1000 MW power plant is expected to generate Rp300-400 billion in associated income in 2025.
Hydropower Expansion
The company is expanding its hydro power division (ARKO) and aims to achieve a capacity of 50-100 MW using the cost-efficient run-of-river method. The internal rate of return (IRR) for this business is projected to be in the low teens.
Geothermal Capacity Doubling
Following the acquisition of a 51.09% stake in Supreme Energy Rantau Dadap for Rp1.25 trillion in March 2024, United Tractors plans to double the geothermal capacity from 2×49 MW to 2×110 MW under a power purchase agreement with PLN.
Valuation and Recommendation
UOB Kay Hian maintains a “HOLD” recommendation for United Tractors, with a revised target price of Rp30,000. This valuation is pegged to a five-year -1.0SD PE of 5.5x 2025F PE, raised from -1.5SD due to strong gold prices. The target price offers a potential upside of 10.3%.
Conclusion
United Tractors continues to demonstrate resilience across its diverse business divisions, from mining contracting to renewable energy investments. While the company faces challenges such as declining coal prices, it remains well-positioned to capitalize on its robust operational strategies and growth in renewable energy projects.
