PT Alamtri Minerals Indonesia Tbk ADMR

2Multi-Year Financial Forecast & Consensus Model

The multi-year financial projections evaluate three operational scenarios through 2031:

• Base Case: Phase 1 of the KAI smelter ramps to 270 kt in FY26 and reaches steady-state capacity of 500 ktpa by FY28 ^[6]. Metallurgical coal production expands to 7.5 Mtpa by FY29 ^[5]. Realized HCC prices average $185–$192/t ^[6], and aluminum prices stabilize at $3,100–$3,280/t ^[6].
• Bear Case: Captive power plant outages disrupt aluminum potlines, keeping smelter volumes below 350 ktpa through FY28. China's steel production softens, pulling benchmark coking coal prices to $140/t while aluminum settles at $2,500/t.
• Bull Case: Tight seaborne hard coking coal supplies push realized coal pricing to $225/t ^[16]. Smelter ramp-up proceeds ahead of schedule, capturing green primary aluminum premiums ($3,500/t) and lifting consolidated EBITDA above USD 1.3 billion ^[6].

Base-Case Financial Model (2024A–2031E)

Figures in USD Millions, unless otherwise indicated. 2026E–2029E represents the primary forecast horizon; 2030E–2031E reflects directional trendlines.

Projected Revenue Mix Breakdown

Multi-Scenario Financial Projections (Bear, Base, Bull)

Execution Confidence Score & Consensus Divergence Flag

• Execution Confidence Score: 66 / 100.
  • Target Achievability (25/35): Supported by high operational visibility on coal extraction ^[5], offset by engineering complexities inherent in smelting commissioning ^[6].
  • Margin Sensitivity (23/35): Driven by international metal prices. A change in LME aluminum pricing shifts consolidated operating margin by percentage points.
  • Unannounced Catalyst Dependence (18/30): Upstream mining requires zero unannounced approvals. However, 32% of FY28 projected operating income depends on the unhindered commissioning of captive power plant units ^[8].
• Consensus Divergence Flag: Base-Case FY27 net earnings ($565M) sit 11.2% below peak sell-side consensus estimates ($636M) ^[6]. This divergence reflects an assumption of USD 125 million in annual facility depreciation and elevated alumina spot prices during initial production phases ^[6].
• Base-Rate Historical Analysis: Achieving a 46% compound annual revenue growth rate from USD 973 million to USD 2,982 million places ADMR in the top 4th percentile of global mining and metals transitions ^[7]. This pace is justified by the simultaneous transformation of the enterprise from a pure extraction business into an integrated smelter operator ^[22].

5Risk Asymmetry, Invalidation, Allocation & Scorecard

Asymmetry Calibration & Position Sizing

• Modeled Probability-Weighted Gain: .
• Stress-Case Capital Downside: .
• Risk/Reward Skew Ratio: .
• Mandate Benchmark: Falls short of the institutional 3.00:1.00 ratio required for high-conviction growth mandates.

Hard Invalidation Triggers

An investment exit is triggered if any of the following operational or balance-sheet events occur:

1. Gross Margin Compression: Consolidated gross margin drops below 28.0% for two consecutive quarters post-Q4 2026, indicating structural cost overruns at KAI ^[6].
2. Smelter Commercial Suspension: KAI potlines encounter a major technical disruption that delays full commercial shipments past Q2 2027 ^[10].
3. Financial Covenant Stress: Consolidated Net Debt to EBITDA rises above 3.2x in any trailing twelve-month reporting period ^[11].

Consolidated Risk Dashboard

Macro Trigger Dashboard

Operational Surprises Analysis

Pre-Mortem: 36 Months Out, Position Down 60%

By October 2029, ADMR's share price has fallen to IDR 585.

The decline began in early 2027 when repeated boiler tube failures at the Bulungan captive power complex caused voltage drops across KAI's Phase 1 potlines ^[8]. Molten aluminum solidified inside reduction cells, halting production and requiring USD 350 million in capital repairs. At the same time, declining steel output across Asia reduced coking coal prices to USD 130 per tonne ^[5].

With upstream mining cash flows cut in half, ADMR struggled to service its project debt ^[10]. Because parent company Alamtri Resources prioritized funding its own separate investments, ADMR launched a dilutive rights offering at IDR 600 per share ^[24]. This expanded the share count by 30% and permanently diluted per-share equity value.

Portfolio Sizing & Implementation Rules

• Risk-Budget Allocation Calculation:

• Recommended Portfolio Role: Tactical Satellite / Commodities Position (1.0% – 1.5% weighting).
• Capital Tranche Strategy: Establish an initial 0.50% allocation at current market levels (IDR 1,465) ^[1]. Increase exposure toward the 1.50% target only after verified financial disclosures confirm profitable, steady-state aluminum shipments from KAI Phase 1 ^[6].

Institutional Scorecard

• Base-Case Execution Likelihood: 65 / 100.
  • Primary Headwind 1: Engineering risks associated with energizing a greenfield aluminum smelter in remote North Kalimantan ^[10].
  • Primary Headwind 2: High earnings sensitivity to cyclical Asian steel manufacturing trends ^[5].

Final Verdict & Bear-Case Steelman

• Existing Shareholders: HOLD / ACCUMULATE ON WEAKNESS. The current share price of IDR 1,465 offers a 29% 36-month return underpinned by volume expansion ^[1].
• New Capital: HOLD / PASS ON MANDATE. The modeled 36-month return of +29.0% falls short of the fund's 100% hurdle, and the risk/reward skew (0.59:1) is unfavorable for an aggressive growth allocation.
• Bear-Case Steelman: "ADMR is taking on significant debt to enter primary aluminum smelting—a capital-intensive industry with lower returns on capital and margins than coking coal mining ^[6]. The smelter's reliance on captive coal power leaves it vulnerable to tightening carbon border adjustments and ESG-driven procurement policies ^[8]. This capital expenditure cycle dilutes returns on invested capital from >25% toward ~11–13% ^[6], while operational ramp risks could leave equity holders exposed to debt service pressures if coking coal prices experience cyclical declines ^[6]."

1Business Architecture, Unit Economics, Moat & Contractual Visibility

Corporate Structure & Operating Divisions

PT Alamtri Minerals Indonesia Tbk manages an integrated resource extraction and primary processing business across two key operating subsidiaries:

Minority equity interests in KAI are held by strategic partners Aumay Mining Pte. Ltd. (22.5%) and PT Cita Mineral Investindo Tbk (12.5%), providing alumina supply relationships and regional marketing networks ^[8].

Economic Moat Classification & Durability Analysis

The company's economic moat is classified under Cost Advantage and Efficient Scale, warranting an insulation score of 4 / 5. The Lampunut mine yields hard coking coal characterized by a Crucible Swelling Number (CSN) of 9, ultra-low ash content (<4.5%), low phosphorus, and high vitrinite concentration ^[5]. These metallurgical qualities make the coal an effective blending agent for blast furnace operators seeking to reduce carbon emissions and slag volumes while using lower-cost coals ^[5].

The competitive insulation is Static to Slightly Widening. Developing competing coking coal deposits in Kalimantan requires large-scale capital investments in remote barging logistics and long river transportation corridors ^[5]. Furthermore, green hydrogen-based Direct Reduced Iron (DRI) technologies will require several decades to replace blast furnaces across developing Asian steel production hubs ^[5].

Replication Risk, Customer Defensibility & Offtake Visibility

Replication of ADMR's coking coal asset is constrained by the natural geographic concentration of high-rank metallurgical deposits in Central Kalimantan, all of which are held under ADMR's existing concessions ^[5]. Primary steelmakers cannot build captive mining concessions within Southeast Asia and rely on long-term supply arrangements ^[5].

Because ADMR is 85.02% owned by the Thohir and Soeryadjaya families via PT Alamtri Resources Indonesia Tbk, a third-party corporate buyout cannot occur without controlling-family approval ^[9]. Customer ROI defensibility scores 8 / 10, as blending Enviromet coal protects blast furnace refractory linings and reduces coking cycle times, leading steel mills to prioritize ADMR off-take agreements even during end-market steel price declines ^[5].

Sector-Specific Unit Economics: Mining & Smelting

The financial performance of the mining segment reflects lowest-quartile cash costs, while the aluminum business introduces a more capital-intensive cost profile:

Overburden removal strip ratios remain stable below 3.5x, preserving cost efficiency across the Maruwai complex ^[15]. The cash cost curve for metallurgical coal is supported by shallow open-pit extraction, while primary aluminum unit economics are anchored by captive power generation and alumina supply partnerships with Cita Mineral Investindo ^[6].

Quality of Revenue, Volume Commitments & Offtake Architecture

Revenue quality rates 7 / 10.

• Contractual Framework: 100% of metallurgical coal production is committed under annual Master Sales Agreements (MSAs) featuring volume quotas and pricing indexed to Platts Premium Low Vol FOB Australia benchmarks ^[16].
• Balance Sheet Backlog: Commodity mining carries zero backlog or deferred revenues, converting receivables to cash over standard 60- to 90-day cycles ^[41].
• Regional Destination Mix: Domestic Indonesian coke plants absorb 35–43% of total coal volume ^[9]. Export volume is distributed across Japan (25%), India (17%), China (12%), and South Korea (3%) ^[9].
• Smelter Off-Take Terms: Initial aluminum production is placed via term export agreements with Asian and American buyers, priced on floating LME cash terms plus regional delivery premiums ^[6].

Management Track Record & Incentive Alignment

Operational guidance tracking across the past eight quarters demonstrates consistent volume execution, with coal production beating annual guidance midpoints by 4.1% in FY24 (5.62 Mt) and 6.7% in FY25 (6.30 Mt) ^[15]. Profit variances have reflected wider swings () caused by volatility in international coking coal benchmarks rather than operational shortfalls ^[7]. Management remuneration is linked to operating EBITDA and safety targets ^[15]. The controlling family's significant ownership in the parent entity ensures alignment on return on capital and balance sheet preservation ^[13].

Executive Summary & Key Metadata

• Stock Name: PT Alamtri Minerals Indonesia Tbk (formerly PT Adaro Minerals Indonesia Tbk) ^[1]
• Current Share Price: IDR 1,465 (USD 0.0927 at USD/IDR 15,800) ^[1]
• Research Date: October 5, 2026
• 12-Month Target Price: IDR 1,750 (+19.5% upside)
• 24-Month Target Price: IDR 1,900 (+29.7% upside)
• 36-Month Target Price: IDR 1,890 (+29.0% upside)
• Institutional Scorecard Score: 68.3 / 100
• Base-Case Execution Likelihood Score: 65 / 100
• Investment Advice: HOLD (for New Capital seeking 100% 36-month return) / TACTICAL ACCUMULATE (for Existing Capital / Broad EM Resources portfolios)

Rationale for Investment Stance

PT Alamtri Minerals Indonesia Tbk possesses an advantaged asset base in Indonesian hard coking coal (HCC), achieving lowest-quartile extraction cash costs of $65–$75 per tonne that generate cash operating margins above 45% ^[5]. The operational commissioning of its 65%-owned subsidiary, PT Kalimantan Aluminium Industry (KAI), transitions the company into primary aluminum processing, driving consolidated revenues from USD 973 million in FY25 to USD 2,046 million in FY26 and USD 2,741 million in FY27 ^[7].

However, this capital expenditure cycle has introduced USD 2,094 million in consolidated gross debt, creating an elevated debt-to-equity ratio of 1.03x and a net debt burden of USD 1,511 million ^[4]. Primary aluminum smelting generates structurally lower gross margins (~18–22%) than metallurgical coal mining, diluting blended corporate margins and driving steady-state price-to-earnings multiple compression ^[6]. Because the modeled 36-month Base-Case return of +29.0% fails the mandated 100% total return hurdle, new capital allocations should be held back, while existing shareholders may maintain positions to capture initial earnings expansion as smelter potlines reach scale ^[6].

Al: $3,150 / $3,200 / $3,220 per tonne | Hard coking coal benchmark FOB equivalent ^[6]; LME primary aluminum cash ingot benchmark ^[6]. | | Sector & Sector P/E Ratio | Materials / Mining & Metals | Indonesian Coal/Energy Sector P/E: 9.6x ^[1]; Basic Materials Sector P/E: 14.2x ^[18]. | | Sector Peer Ranking (Risk-Adj. 36-Mo Return) | 1. AMMN (Copper/Gold Smelter)

2. ADRO (Parent / Cash Cow)

3. ADMR (Met Coal/Al Smelter)

4. PTBA (Thermal Coal Utility) | ADMR ranks 3rd out of 4 peer names due to smelter project leverage relative to parent capital returns ^[20]. | | Forward PEG Ratios (1, 2, 3, 4, 5-Yr) | 1Y: 0.34x | 2Y: 0.38x | 3Y: 0.55x

4Y: 1.25x | 5Y: 1.60x | Earnings inflection in FY26–FY27 compresses near-term PEG ^[11]; multiple normalizes as growth plateaus. | | Current Fair Value & Variance | IDR 1,680 (USD 0.1063) | Current trading price of IDR 1,465 reflects an undervaluation of −12.8% relative to intrinsic fair value ^[1]. | | Tangible Price Floor & Downside | IDR 715 (USD 0.0453) | Tangible equity liquidation support per share ^[11]; implies −51.2% downside in an asset-stress event. | | Share Count Now vs. 36-Mo Model | Current: 40,882.41M shares ^[9]

36-Mo: 40,882.41M shares | Announced Dilution: 0 shares ^[11]. Base case models all capital commitments funded via internal cash flows. | | Insider & Controlling Ownership | 85.42% | PT Alamtri Resources Indonesia Tbk holds 85.02% ^[9]; C-suite directors hold ~0.40% ^[13]. | | Insider Buying (Last 6 Months) | NOT RELIABLY AVAILABLE for C-suite open-market purchases. | Parent ADRO acquired 231M ADMR shares in Oct 2025 at ~IDR 1,432 (IDR 331B) ^[23]; zero direct C-suite buys in 1H26. | | Short Squeeze Potential Score | 18 / 100 | Negligible; IDX borrowing mechanisms remain illiquid; verifiable short interest is near zero ^[11]. | | Announced Share Buyback Program | 0% of ADMR Public Float | No active buyback program. Parent company ADRO launched an independent IDR 4.0T program ^[20]. | | 6-Month Share Buyback Probability | 15% | Unlikely; capital allocation prioritizes KAI phase 1 debt service and working capital ^[15]. | | Diluted vs. Fully Diluted Share Count | Diluted: 40,882.41M shares

Fully Diluted: 40,882.41M shares | No dilutive stock options, warrants, or convertible debt instruments outstanding ^[11]. | | Cash Runway & Operational Self-Sufficiency | Operationally Self-Sustaining | Cash flow positive from coal mining ^[9]; consolidated FCF turned positive in mid-2026 upon export ramp ^[9]. | | Total Gross Debt vs. Cash Balance | Gross Debt: USD 2,094.0M ^[4]

Cash: USD 583.0M ^[4] | Net Debt: USD 1,511.0M (IDR 23.87T) ^[4]. Debt is largely tied to KAI smelter and power syndicated loans ^[10]. | | Debt Restructuring Dates & Risk Score | Amortization begins 2027–2033.

Debt Distress Score: 22 / 100 | Commercial debt is backstopped by strategic asset security and corporate sponsor support ^[10]. | | Gross & Operating Margins (TTM, 3Y, 5Y) | TTM: Gross 44.3% | Op 37.3% ^[11]

3Y: Gross 36.6% | Op 32.3%

5Y: Gross 36.0% | Op 32.0% | Margin dilution reflects primary aluminum blending (lower gross margins than premium coking coal) ^[6]. | | Regulatory & Permitting Risk Score | 52 / 100 | Moderate; exposed to Indonesian domestic market obligations (DMO) and captive coal power emissions scrutiny ^[8]. | | Economic Moat & Moat Score | 78 / 100 (Cost Advantage & Scale) | Sole large-scale hard coking coal producer in Indonesia; integrated river logistics infrastructure ^[5]. | | Primary Competitive Advantage | CSN 9 Ultra-low Ash HCC ^[5] | Mining cash cost of ~$65–$75/t yields EBITDA margins >45% even in depressed coal price environments ^[6]. | | Rule of 40 Metrics (Now, +1Y, +2Y, +3Y, +4Y) | FY26E: 116.9% | FY27E: 52.2%

FY28E: 30.0% | FY29E: 23.5%

FY30E: 26.0% | Skewed upward in FY26–FY27 by smelter commercial ramp ^[9]; settles to ~25% industrial normalized rate. | | Analyst Coverage & Target Distribution | 8–10 Institutional Analysts ^[11]

Mean: IDR 2,150 | Bull: IDR 2,940

Bear: IDR 1,060 ^[32] | Street consensus exhibits wide bifurcation regarding KAI smelter net margin capture and power costs ^[6]. | | Metallurgical Coal Concession Mine Life | 25+ Years Reserves (173 Mt) ^[5]

100+ Years Resources (975.6 Mt) ^[5] | Concession areas (146,579 ha across 5 CCoWs) provide multi-decade volumetric visibility ^[5]. | | Offtake Agreement Structures & Spot | Coal: Annual benchmark linked ^[16].

Al: Indexed to LME + premium ^[6].

Current Coal Spot: ~$188/t ^[9]. | Coking coal offtakes signed with Nippon Steel, JFE, and domestic coke plants; Al signed with regional consumers ^[5]. |

0Output Contract & Investment Mandate

Reporting Parameters & Anchor Inputs

Consolidated financial statements for PT Alamtri Minerals Indonesia Tbk are officially presented in United States Dollars (USD), with operating equity metrics quoted in Indonesian Rupiah (IDR) using an exchange rate of USD 1.00 = IDR 15,800 ^[15]. The fiscal reporting year conforms strictly to the calendar year ending December 31 ^[15].

The operational baseline relies on six core financial anchors:

Parameter	Unit Value	Confidence Tier	Source Attribution & Arithmetic Derivation
Current Stock Price	IDR 1,465	VERIFIED	Official closing price on the Indonesia Stock Exchange, Oct 2, 2026 [1].
Fully Diluted Share Count	40,882.41M shares	VERIFIED	IDX Shareholder Profile disclosure, period ending August 31, 2026 [9].
Market Capitalization	IDR 59,892.7B ($3,790.7M)	DERIVED	[4].
Cash & Cash Equivalents	USD 583.0M (IDR 9.21T)	VERIFIED	1H26 Consolidated Financial Statements, Note 4 [4].
Gross Total Debt	USD 2,094.0M (IDR 33.08T)	VERIFIED	1H26 Consolidated Balance Sheet (Bank borrowings and KAI project loans) [4].
Net Debt	USD 1,511.0M (IDR 23.87T)	DERIVED	[4].
Enterprise Value (EV)	USD 5,301.7M (IDR 83.77T)	DERIVED	[4].
Trailing P/E Multiple	10.84x (GAAP) / 13.19x (TTM)	VERIFIED	S&P Global Market Intelligence trailing data feed [1].

Investment Mandate Evaluation

The fund's core objective requires generating a 100% total return within a 36-month horizon, targeting an exit price of IDR 2,930. The Base-Case model projects a 36-month terminal equity price of IDR 1,890 (+29.0%), failing the mandate threshold by 71.0 percentage points. The probability of clearing the hurdle across all modeled distributions stands at 20.0%, confined entirely to the Thesis Upside and Aggressive operational scenarios.

The fund risk budget enforces a maximum portfolio-level loss of 1.0% in the Stress Case. Against a modeled Stress-Case decline of −53.6% (Stress target: IDR 680), the maximum allowable portfolio position sizing is capped at 1.86% ().

Governance & Analytical Discipline Rules

Information across the preceding 90 days indicates steady barging throughput from the Lampunut concession along the Barito River, alongside the trial export shipment of primary aluminum ingots from the Bulungan smelter in June 2026 ^[9]. The primary data gap relates to standalone potline operating cost structures and captive thermal power dispatch costs during the testing phase, which are classified as ASSUMED based on comparable industrial smelter profiles ^[6]. Consensus estimates incorporate models from 8 to 10 covering institutional desks ^[11]. Environmental opposition regarding the initial coal-fired power units at the Bulungan Industrial Park is documented as project-level financing friction rather than binding operational prohibitions ^[8].

Executive Summary: Thesis, Catalyst & Downside

Strategic Takeaways

1. Metallurgical Coal Provides Resilient Margin Baselines: Operational extraction costs of $65–$75 per tonne at the Lampunut deposit allow ADMR to capture cash EBITDA margins above 45% during cyclical commodity troughs, generating sustained cash inflows from the upstream mining segment ^[5].
2. KAI Aluminum Facility Drives Top-Line Scale: The energization of Phase 1 at the Bulungan smelter (500,000 tpa capacity) doubles consolidated net revenues from USD 973 million in FY25 to USD 2,046 million in FY26 and USD 2,741 million in FY27 ^[7].
3. Smelting Blending Dilutes Corporate Gross Margins: Because primary aluminum smelting is structurally more capital intensive and generates gross margins of 18–22%, consolidated gross margins will adjust from historical peaks near 50% toward 36% over the forecast period ^[6].
4. Project Leverage Restricts Near-Term Financial Flexibility: With gross debt expanding to USD 2,094 million to fund smelting infrastructure, debt service requirements will absorb operating cash generation through 2028, limiting near-term capital returns to minority shareholders ^[10].
5. Tight Public Float Leaves Minorities Dependent on Parent Strategy: PT Alamtri Resources Indonesia Tbk controls 85.02% of ordinary shares, leaving an unencumbered float of 14.58% that prevents corporate takeover bids and ties capital allocation to broader conglomerate initiatives ^[9].

• Single Greatest Upside Driver: Accelerated potline ramp-up at KAI paired with a sustained structural deficit in global primary aluminum, allowing operating EBITDA to clear USD 1.25 billion by FY28 ^[6].
• Single Thesis-Killer: Prolonged power outages or generator trips at the captive Bulungan power complex that damage potlines and stall smelter operations, forcing dilutive capital calls during a metallurgical coal pricing downturn ^[8].

3Capital Structure, Balance-Sheet Stress Test & Market Microstructure

Liquidity Stack & Debt Maturity Distribution

Consolidated gross debt totaled USD 2,094.0M as of 1H26 ^[4], reflecting project loans drawn down for KAI smelter construction and related infrastructure ^[10]:

• KAI Smelter Facility: USD 981.4M commercial bank syndicated term loan plus an IDR 1.5T local currency tranche ^[10].
• Captive Power Facility (Kaltara Power Indonesia): USD 603.0M plus an IDR 192.1B tranche secured against generation infrastructure ^[10].
• Commercial Credit Facilities: USD 250.0M in revolving working capital lines with state-owned domestic lenders ^[15].

The debt maturity schedule reflects grace periods tied to construction timelines, with principal amortization beginning in FY27:

Capital Gap Analysis & Cash Runway Clock

• Operating Cash Generation: Projects USD 450M in FY26E and USD 680M in FY27E.
• Capital Expenditures: Peaked at USD 405.7M in FY24 and USD 315M in FY25 ^[15]. FY26 capex is modeled at USD 320M as potlines and cathode infrastructure are completed ^[9]. Sustaining maintenance capex normalizes to ~$140–$150M annually across FY27–FY29.
• Funding Balance: Yields positive free cash flow generation of USD 130M in FY26E, USD 500M in FY27E, and USD 630M in FY28E.
• Cash Runway Clock: Upstream coking coal operations have generated positive cash flows since FY22 ^[15]. Consolidated operations reached positive free cash flow in June 2026 following initial aluminum export shipments, eliminating the need for external rescue financing ^[9].

Dual-Track Dilution Model & Share-Count Roll-Forward

Track B evaluates a stress scenario where unforeseen smelter remediation requires a USD 400M equity injection executed via a preemptive rights issue at a 35% discount (IDR 950/share). This scenario issues 5,110M new shares and dilutes steady-state EPS by 18.6%.

Market Microstructure & Trading Flow Dynamics

• Documented Short Position: Near 0.0% of float ^[11]. Regulatory provisions on the IDX restrict naked shorting.
• Free Trading Float: 14.58% (~5,960M shares) ^[9].
• Average Daily Trading Volume (ADV): 31.94M shares (IDR 50.1B / USD 3.17M) ^[9].
• Position Liquidation Horizon: Fully liquidating a 2.0% institutional fund holding (81.76M shares) at 20% of normalized daily trading volume requires 12.8 trading days.
• Price Driver Classification: Trading over the prior 90 days (bounded between IDR 1,385 and IDR 1,785) ^[1] has been driven by fundamental earnings releases and benchmark coal pricing, rather than technical flows ^[7]. The Short Squeeze Potential Score is rated at 18 / 100.

4Valuation, DCF Sensitivity & Price Scenario Matrix

Peer Group Comparative Multiples

For institutional investors seeking immediate income, parent entity ADRO provides more favorable risk-adjusted asymmetry via net-cash protection, active buybacks, and high cash distribution yields ^[13].

Intrinsic Valuation (DCF Model)

• Weighted Average Cost of Capital (WACC):
  • Risk-Free Rate (): 6.65% (Indonesian 10-Year Government Benchmark).
  • Equity Risk Premium (ERP): 5.50%.
  • Operational Asset Beta (): 0.85 (Raw Beta: 0.17) ^[11].
  • Cost of Equity (): .
  • Pre-Tax Cost of Borrowing: 7.20% ^[10]; Effective Tax Rate: 22.0% ^[40]; After-Tax Debt Cost (): 5.62%.
  • Capital Weights: Equity 71.5%, Debt 28.5% ^[4].
  • Calculated Corporate WACC: 9.70%, adjusted to an institutional execution rate of 11.50%.

DCF Intrinsic Value Matrix (Equity Value per Share in IDR)

• Tangible Floor Analysis: Total Cash ($583M) + Tangible Fixed Assets ($2,342M) less Consolidated Liabilities ($2,208M) leaves a Net Tangible Asset value of USD 717M ^[4], establishing a liquidation floor at IDR 715 per share (−51.2% downside).
• Reverse DCF Analysis: At a share price of IDR 1,465, the market is pricing a 14.2% revenue CAGR and a 24.5% terminal operating margin, indicating that current market pricing incorporates successful Phase 1 smelter delivery while discounting peak coking coal cash margins ^[9].

Rolling Price Forecast: 5 Scenarios × 3 Horizons

Exit multiples compress across outer years to account for decelerating post-ramp growth profiles:

Scenario Valuation Decomposition (36-Month Target Build)

• Stress (15% Weight): Assumes EPS of IDR 113 capitalized at a 6.0x multiple (IDR 680). Steel industry downturn reduces coal off-take; persistent smelter power outages produce operational deficits.
• Conservative (25% Weight): Assumes EPS of IDR 245 capitalized at a 7.0x multiple (IDR 1,720). Metallurgical coal prices stabilize at $160/t; aluminum sells at baseline prices ($2,800/t) without a green premium ^[6].
• Base (40% Weight): Assumes EPS of IDR 263 capitalized at a 7.2x multiple (IDR 1,890). KAI Phase 1 reaches 500 ktpa capacity; met coal averages $190/t; the valuation multiple de-rates from 8.4x to 7.2x as top-line growth decelerates ^[1].
• Thesis Upside (15% Weight): Assumes EPS of IDR 338 capitalized at an 8.8x multiple (IDR 2,980). Low-carbon aluminum secures premium pricing ($3,500/t); Indian blast furnace expansion supports metallurgical coal demand ^[39].
• Aggressive (5% Weight): Assumes EPS of IDR 385 capitalized at a 10.0x multiple (IDR 3,850). Global supply deficits emerge in both metallurgical coal and primary aluminum, driving cash margins to multi-year highs ^[17].

The 36-month probability-weighted target of IDR 1,928 (+31.6%) aligns within 9.5% of the DCF Base intrinsic value of IDR 1,760, confirming model equilibrium across independent approaches.

6Catalyst Calendar

Projected Catalyst Date	Event Description	Strategic Importance & Thesis Validation	Potential Price Move
October 30, 2026	Q3 2026 Financial Results Release [11]	Discloses initial operating margins and smelting costs from early KAI export shipments [6].	to
December 15, 2026	KAI Phase 1 Commercial Potline Energization [10]	Confirms whether smelter operations are on track to achieve the 500 ktpa capacity target [10].	(Bull) / (Delay)
February 28, 2027	FY26 Audited Financial Report & FY27 Guidance [15]	Validates full-year coal sales volumes and updates smelter cost targets [9].	to
April 18, 2027	Annual General Meeting of Shareholders (AGMS) [42]	Outlines capital allocation, dividend payouts, and debt amortization plans [20].	to
June 30, 2027	KAI 12-Month Performance Review [10]	Evaluates whether smelter cash costs match management's (2,580/t target [6].	)\pm 8.0%$ to

7Tactical Execution Layer

The tactical framework combines DCF intrinsic valuation models with historical trading support and resistance levels on the IDX ^[1]:

Execution Field	Recommended Level	Tactical Rule & Analytical Rationale
Best Entry Zone	IDR 1,280 – IDR 1,380	Sits near the 52-week support corridor; offers a 12-month upside [1].
Add Zone	IDR 1,385 – IDR 1,440	Favorable accumulation zone for existing portfolio holders [1].
Hold Zone	IDR 1,445 – IDR 1,750	Current trading channel; reflects baseline fair value for mining assets [1].
Trim Zone	IDR 1,950 – IDR 2,150	Nearing the consensus price target cluster; fully values the Base Case [9].
Sell Zone	IDR 2,300+	Approaching the 52-week peak (IDR 2,320); multiples fully price in the bull case [1].
Hard Stop Level	IDR 1,180	Thesis Break: Below the October 2025 swing low (IDR 1,065–1,265) [1]; triggers Invalid. Trigger 1.
Key Support (S1 / S2)	S1: IDR 1,385 | S2: IDR 1,265	90-day trading floor [1] and 2026 year-to-date consolidation base [1].
Key Resistance (R1 / R2)	R1: IDR 1,785 | R2: IDR 2,320	90-day trading ceiling [1] and 52-week high resistance level [1].
Beta (5Y Raw / Adjusted)	0.17 Raw / 0.85 Adjusted	Low statistical index beta reflecting high family share ownership concentration [11].
3-Year Max Drawdown	−54.1%	Recorded between January 2026 high (IDR 2,320) and October 2025 low (IDR 1,065) [1].
Realized Volatility (30D)	32.4% Annualized	Typical for mid-to-large-cap Indonesian resource and mining equities.
Tactical Recommendation	HOLD / ACCUMULATE ON PULLBACK	Maintain exposure; refrain from deploying aggressive new growth capital at current price [1].
Timing Verdict	Wait for Pullback into Best Entry Zone	Wait for a pullback to IDR 1,350 or confirmation of positive Q3 2026 operating profits at KAI [1].

The stop-loss level of IDR 1,180 is a fundamental thesis stop. A sustained decline below this threshold indicates that smelter operational delays or coking coal cash-cost inflation are impairing normalized earnings capacity ^[6].

Closing Audit & Analytical Disclosures

Unverified Figures & Data Limitations

• KAI Smelter Operating Unit Economics: Standalone operational data for PT Kalimantan Aluminium Industry currently reflects trial shipments, with 1H26 operating losses reported at roughly -USD 45.5M ^[9]. Fully audited steady-state margins and energy costs will be verified in the FY26 annual report ^[15].
• Debt Amortization Schedules: Precise annual amortization schedules for the USD 981.4M and USD 603M credit facilities are modeled from syndicated project finance terms, subject to final statutory note disclosures ^[10].

Internal Consistency Self-Audit

• Share Count Reconciliation: Per-share figures consistently use the 40,882.41M share baseline across market valuations, enterprise value calculations, and EPS models ^[4].
• Valuation Multiple Reconciliation: The 12-month Base target of IDR 1,750 reflects FY27E EPS of IDR 218 capitalized at an 8.0x multiple (). The 36-month target of IDR 1,890 reflects FY29E EPS of IDR 263 capitalized at a 7.2x multiple (), maintaining model consistency with expected growth deceleration.
• Cash Flow Dynamics: Modeled free cash flow per share begins at IDR 50 in FY26E due to USD 320M in capital spending ^[9]. FCF expands to IDR 193 in FY27E and IDR 243 in FY28E as capital expenditures normalize, tracking the projected revenue trajectory.

Scenario Distribution Bias Check

• Downside Scenarios: Stress (15%) + Conservative (25%) = 40% Cumulative Weight.
• Base Case: 40% Cumulative Weight.
• Upside Scenarios: Thesis Upside (15%) + Aggressive (5%) = 20% Cumulative Weight.
• Skew Rationale: The distribution assigns an 80% combined probability to base and defensive outcomes. This weighting accounts for the capital intensity of downstream smelting, balance sheet debt, and cyclical steel demand trends across Asian markets ^[5].

Reporting Disclosures

• Sections Truncated: None. All core sections, models, and risk disclosures are presented in full detail.

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