SET-listed coal mining and power company Banpu Plc has received an A+ company rating from Tris Rating.
Tris also rates Banpu's senior unsecured debentures an A+. The ratings are based on Banpu's leading position in coal mining in Asia-Pacific, its diverse customer base and geographic diversification of coal reserves, its reliable stream of income from the power segment and its strategic move to become an integrated energy company.
According to Tris, Banpu's coal mining operations in 2018 accounted for coal sales of 45 million tonnes. Of total sales volume, 22% was to buyers in China, 20% to Australia and 14% to Japan.
The remaining volume was sold to customers in Korea, Taiwan, India, Indonesia, the Philippines and other countries in Southeast Asia, illustrating the company's diversified customer base.
The company's aggregate coal reserves in Indonesia and Australia stood at 563 million tonnes as of September, up from 519 million tonnes a year earlier, mainly due to higher coal prices.
Reserves at the Indonesian and Australian mines indicate a reserve life of about 11 years and over 20 years, respectively, and are likely to increase as coal prices remain strong.
Furthermore, Banpu's coal production from Indonesian and Australian mines is targeted to increase to 40 million tonnes in 2020 from 37 million tonnes in 2017.
The PT Tepian Indah Sukses (TIS) coal mine acquired in 2017, with coal reserves of 4.7 million tonnes, will start operating in late 2019, with production volume of about 1 million tonnes a year.
In addition, the PT Nusa Perdana Resources (NPR) coal mine acquired in 2018, with a total investment cost of US$30 million and 77.4 million tonnes of coal reserves, is expected to start operating in late 2022, with production volume of about 4 million tonnes a year.
Banpu's power business provides reliable cash flows that safeguard overall performance against fluctuations in coal prices, Tris said.
Tris noted the company has gradually invested in Banpu Power Plc (BPP), a subsidiary with many power projects in Thailand, Laos, China and Japan.
In addition, the power segment generated earnings before interest, tax, depreciation and amortisation of about 19% of Banpu's total ebitda and dividends of $64 million during the first nine months of 2018.
Additionally, Banpu aims to be an integrated energy solutions company, capturing new opportunities and offsetting the slowing pace of coal demand in the long term.
Banpu acquired a 28.86% shareholding in Sunseap Group Pte Ltd in 2017. Sunseap is an energy solutions provider in Singapore, with solutions ranging from rooftop installations to floating photovoltaic systems.
In March, Banpu acquired a 44.8% stake in New Resources Technology Pte (NRT) for $33.2 million.
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