Jakarta. Petrosea (PTRO) announced it had secured a new mining contract worth $1.4 billion. 

This amount represents 60 percent of the company’s total contract backlog for 2023, which is $2.3 billion. Most of these contracts are medium to long-term, offering Petrosea protection from market volatility.

This achievement provides a bright future for Petrosea, thanks to full backing from its new controller, Petrindo Jaya Kreasi (CUAN), which is part of the Barito Group’s mining portfolio owned by conglomerate Prajogo Pangestu. 

The Barito Group has provided fresh momentum to PTRO’s efforts to secure contracts in the mining and EPC (engineering, procurement, and construction) sectors, reaching a combined total of $1.8 billion.

Sucor Sekuritas analyst Yoga Ahmad Gifari predicts that this new contract acquisition will boost PTRO's revenue and profits in the coming years. In the EPC segment, revenue is expected to rise by 152% to US$ 747 million. Meanwhile, revenue from the mining segment is forecast to surge by 60% to US$3.7 billion.

This growth projection is expected to improve PTRO’s leverage compared to its previous position. Importantly, the long- and medium-term nature of the majority of PTRO’s contracts will help the company maintain steady revenue streams while reducing future liquidity risks.

“We estimate a strong CAGR [Compound Annual Growth Rate] of 59 percent for the company from 2023 to 2028. This growth has the potential to be the highest among its peers in the industry,” Yoga said. 

This projected profit growth aligns with the substantial increase in contract volume within the mining segment, as well as additional contributions from the coal segment. According to Yoga, the substantial additional contracts could accelerate PTRO’s revenue growth in the future, with a higher CAGR than in the past four years.

PTRO’s consolidation into the Petrindo Group ecosystem also opens up vast opportunities for the company to expand and diversify its business. Given that CUAN, the parent company, still owns untapped assets such as gold, copper, silver, and silica, this potential could become a new revenue engine for PTRO.

"Therefore, we see significant upside potential for PTRO in securing new projects, which could drive substantial revenue growth in the future," Yoga said. 

The promising future of PTRO is also reinforced by the company’s solid financial position. With strong capital reserves, PTRO is well-positioned to execute business expansion plans smoothly.

As of September 2024, PTRO recorded a debt-to-equity ratio (DER) of 1.0x, well below the 3.5x limit set by lenders. This ratio is expected to decrease to 0.7x by 2028, in line with the anticipated strong profit growth and stable dividend payout policy of 30 percent.

Moreover, PTRO has recently secured a credit facility of $ 480 million from Bank Central Asia Tbk (BBCA) to support its growth initiatives and debt refinancing.

PTRO’s interest coverage ratio (ICR) stood at 1.7x as of September 2024. With a projected CAGR of 37 percent for operating profit, the company’s ICR is expected to reach 9.5x by 2028.

“We believe the liquidity risk for bondholders will be well-managed in terms of liquidity. Given that existing bank loans have longer maturities, with most extending beyond 5 years, this will be beneficial for bondholders,” Yoga said. 

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