In this note we provide a detailed breakdown of each of UNTR’s segments and overall investment portfolio value, and provide our assessment on how to improve UNTR’s total shareholder return. Despite its diversification efforts, UNTR’s valuation still trails those of its coal peers, in our view. While it will take more time, in our view UNTR’s total shareholder return can be further improved by 1) growing earnings, predominantly from the gold and nickel segment, once its investment starts to bear fruit – ultimately resulting in a 2) higher dividend payout, and thus dividend yield.

Deserves higher total shareholder value driven by rerating

UNTR provided 22% total shareholder return for the 2022-2024 period, driven by earnings growth and dividend yield – thanks to a coal upcycle in 2021-2022. During the same time, UNTR’s share price declined by -24% compared to coal peers up an average of 19% and the JCI index up 12% YTD. Given the company’s diversification efforts, we believe UNTR deserves a rerating and will provide ~40% TSR target (based on our target price) and higher once contribution from its investments kick in.

It takes time for investment efforts to result in increased earnings

We highlight the company’s past gold acquisition including Sumbawa Juta Raya (SJR) and Martabe gold mine (both unlisted) in 2015 and 2018, respectively, with SJR just finally commissioned in early 2025. As a result of this investment, together with Martabe, the gold segment contributed 23% of UNTR’s 6M25 earnings, and acted as a growth segment.

Due to minimal earnings contribution, we believe investors have yet to take into consideration most of UNTR’s recent investment efforts. Post 2022, UNTR has made a total of IDR21tn in investments, including 1) Power: Bhumi Jati Power (unlisted; 25% ownership) contributing ~IDR360bn of annual earnings to UNTR; 2) Nickel: the acquisition of NIC AU (IDR9.38tn for ~20% ownership) and nickel mine (Stargate [unlisted]; ~IDR4.8tn); 3) Geothermal: Supreme geothermal (unlisted; ~IDR2.6tn) with installed capacity of 91.2MW. While nickel optically is still contributing a loss (due to one-off impairment of NIC), we expect more contribution in the future as more nickel intermediaries projects start to be commissioned. Based on Bloomberg’s consensus estimates, we expect NIC could provide IDR817bn earnings contribution to UNTR in FY26F.

Maintain Buy with a TP of IDR30,600

We have a Buy rating on UNTR with a TP of IDR30,600, based on SOTP valuation: 1) 4.5x FY25F target P/E for coal, mining contracting and other segments; and 2) DCF valuation for its gold segment with a 12% WACC. Our TP implies 6.6x FY25F P/E. We view UNTR deserves a rerating, as it has a better earnings profile vs its coal peers thanks to its diversification, with an attractive 7.7% dividend yield. Downside risks include: 1) a sharp fall in coal prices, 2) an unfavorable regulatory environment, and 3) ineffective execution in its new business lines, i.e., gold and nickel.

Fig. 1: UNTR provide more stable earnings vs peers…

Fig. 2: …yet our TSR analysis shows a derating P/E vs peers

Fig. 3: Historical TSR suggest coal peers enjoyed P/E rerating

Fig. 4: UNTR TSR analysis – historically driven by EPS and dividend while P/E derates; deserves rerating, in our view, as it is approaching target TSR of 40%

Fig. 5: Breaking down UNTR segments and investments

Fig. 7: Nickel industries earnings trend adjusted for UNTR’s stake

INVESTMENT RATINGS
A rating of ‘Buy’, indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months. A rating of ‘Neutral’, indicates that the analyst expects the stock to perform in line with the Benchmark over the next 12 months. A rating of ‘Reduce’, indicates that the analyst expects the stock to underperform the Benchmark over the next 12 months. A rating of ‘Suspended’, indicates that the rating, target price, and estimates have been suspended temporarily to comply with applicable regulations and/or firm policies. Securities and/or companies that are labelled as ‘Not Rated’ or ‘No Rating’ are not in regular research coverage. Benchmark is Indonesia Composite Index (‘IDX Composite’). A ‘Target Price’, if discussed, indicates the analyst’s forecast for the share price with a 12-month time horizon, reflecting in part of the analyst’s estimates for the company’s earnings, and may be impeded by general market and macroeconomic trends, and by other risks related to the company or the market in general. 

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Michael Wildon Ng (michael.wildon@verdhana.id)