Merrill cuts Bumi earnings forecast

Merrill cuts Bumi earnings forecast

JAKARTA: PT Bumi Resources, Indonesia's biggest coal exporter,
had its earnings estimate cut by Merrill Lynch & Co. after the
brokerage lowered its forecast for thermal coal used to generate
electricity.

Merrill cut its 2006 earnings forecast for Bumi by 21 percent
to Rp 126.51 (1.3 U.S. cents) and its 2007 forecast by 20 percent
to Rp 119.75, in an e-mailed report on Friday. It maintained its
2005 forecast of Rp 115.94.

Bumi became Indonesia's largest coal producer and exporter
after acquiring two coal mines this decade. The brokerage cut its
coal price forecasts for 2006 by 19 percent to $43 a metric ton
and its 2007 forecast by 7 percent to $40 a ton.

"The revision was driven entirely by the lowering of our
thermal coal price assumption," the report said.

Merrill maintained a "buy" call on the stock with a target of
Rp 1,350 in 12 months, cut from an earlier target of Rp 1,425,
the report said. The shares have fallen 2.5 percent since the
year started to Rp 780.

The brokerage said it expects "a significant growth in
Indonesia's coal-based power generating capacity," which may
benefit Bumi if it wins new supply contracts, the report said. --
Bloomberg