ADRO is undergoing a post-divestment transition marked by weaker financial performance due to lower global coal prices, although higher coal sales volumes and relatively stable margins indicate that profitability pressure remains manageable.

ADRO’s expansion into renewable energy, particularly hydropower and potential solar projects, represents a positive medium- to long-term catalyst by providing more stable, recurring revenues with lower exposure to commodity price volatility. Supported by Indonesia’s net zero emission agenda, these projects may benefit from regulatory incentives and green financing, while enhancing ADRO’s ESG profile and reducing long-term reliance on coal.

Coal prices in 2026 are expected to remain broadly stable across both thermal and metallurgical segments, supported by steady demand from China and India, with limited upside potential and balanced risks from supply disruptions and the global energy transition.

In FY25F, ADRO’s revenue is projected to normalize amid softer coal prices, but earnings resilience is supported by cost discipline and the strength of its core coal mining and trading business, while non-coal segments remain a minor contributor.

We initiate coverage with a BUY recommendation on ADRO with a target price of IDR2,140, supported by SOTP-based upside from asset monetization and stable cash flows, although risks remain from coal price volatility, execution uncertainty in non-coal projects, and operational disruptions.

By PHINTRACO SEKURITAS | Research
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