[Indonesia] Transportation

Buana Lintas Lautan Tbk Not-rated

(BULL IJ)

Cruising North

Mirae Asset Sekuritas Indonesia

Handiman Soetoyo handiman.soetoyo@miraeasset.co.id Kevin Suryajaya kevin.suryajaya@miraeasset.co.id

Concluding the year stronger  BULL reported 9M20 net profit of USD40.8mn, surging by 219.7% compared to last year at
USD12.8mn, while its top line recorded USD144.7mn, rising by 93.4% from USD74.8mn.
 The strong results were supported by an increase in the number of fleet of 16 additional
tanker vessels, mostly large vessels. Currently the company owns a total of 35 vessels.
 Margins also expanded by c.1000bps YoY, contributed by new vessels operating
internationally. International operations contributed 35%-40% to total revenue, compared to
15% in 9M19. Margin expansion also came from large vessels which generate higher margin.

Prudent strategy  Instead of purchasing newly built vessels, BULL prefers to purchase mid-cycle ones (10-15
years of age) which cost c.50%-70% lower than the new ones. By doing so, BULL can purchase
up to 3 times more ships, resulting in triple the revenue and faster payback period.
 As of September 2020, net debt to EBITDA was at 2.5x and is expected to decrease to 2.4x by
the end of 2020, making BULL’s debt level as one of the lowest in the shipping industry.
 Operation-wise, 80-90% of BULL’s contracts are time charters (2-5 years and renewable),
providing high earnings visibility. BULL successfully diversified its operating geography of
Indonesia, vs. international, from 85:15 in 9M19 to 60:40 in 9M20. Its customer base is also
more diversified, as revenue contribution from Pertamina was reduced from 52% to 39%.

Catalysts ahead  Additional vessels will be fully operational in 4Q20. Year-to-date, BULL has increased fleets by
10 in total, to 35 vessels this year. Fleet tonnage capacity amplified from 1,048,040 DWT to
2,156,473 DWT, an increase of 105.8%.
 International operations will see higher Time Charter Equivalent (TCE) rate. Note that TCE rate
is seasonally the lowest in 3Q and the strongest in 4Q, in line with oil demand seasonality.
 The strong economic rebounds in China and USA will further spur oil import, hence leading to
higher shipping traffic and TCE rate.

Valuation  Currently, BULL is trading at IDR326/share, implying trailing FY20 P/E of 6.1. Risks include: 1)
Lower oil demand; 2) forex volatility; and, 3) longer-than-expected economic recovery.

Key data
(D-1yr=100)
JCI BULL
Share Price (11/12/20, IDR) 326 Market Cap (IDRbn) 4,062.5
210
Consensus NP (21F, USDmn) 69.5 Shares Outstanding (mn) 12,461.8
190
170 NP Mirae Asset vs. consensus (21F, %) N/A Free Float (%) 66.9
150
130 EPS Growth (21F, %) N/A Beta (Adjusted, 24M) 1.1
110
P/E (21F, x) N/A 52-Week Low (IDR) 111
90
70 Industry P/E (21F, x) 16.1 52-Week High (IDR) 356
50
11/19 1/20 3/20 5/20 7/20 9/20 11/20 Benchmark P/E (21F, x) 14.2

Share performance Earnings and valuation metrics

(%) 1M 6M 12M FY () 2015 2016 2017 2018 2019 9M20
Absolute 3.2 63.0 80.1 Revenue (USDmn) 50.6 51.2 65.1 85.4 101.5 144.7
Relative -5.0 40.9 91.0 Operating Profit (USDmn) 14.5 8.5 21.0 25.5 32.9 69.4
Operating margin (%) 28.7 16.5 32.2 29.8 32.4 47.9
Net profit 10.0 0.5 8.5 13.5 21.0 40.8
Total assets 206.8 238.8 311.1 330.0 550.8 719.8
Total liabilities 104.5 140.1 153.1 136.2 267.9 387.2
Shareholders' equity 102.3 98.6 144.6 181.5 268.3 321.6
P/E (x) 5.7 117.7 13.7 12.2 12.7 5.0
P/B (x) 0.6 0.6 0.8 0.9 1.0 0.8
ROA 4.9 0.2 3.1 4.2 4.8 9.5
ROE 11.1 0.5 7.0 8.3 9.3 19.1
Note: Net profit refers to net profit attributable to controlling interests
Source: Company data, Mirae Asset Sekuritas Indonesia Research
Analysts who prepared this report are registered as research analysts in Indonesia but not in any other jurisdiction, including the US.
PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES AND DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.
November 13, 2020 Buana Lintas Lautan Tbk

Company profile
PT Buana Lintas Lautan Tbk is Indonesia’s largest (2.3mn DWT capacity as of June 2020) and fastest-
growing (11.03x increment since 2013) oil & gas tanker company. BULL primarily operates in
Indonesia but has been expanding to the international waters in recent years. BULL owns 35 vessels,
consisting of oil tankers (30), gas tankers (3), chemical tankers (1), and FPSO (Floating Production and
Storage) (1). 23 vessels operate in Indonesia and 12 in the international waters.
BULL has two competitive advantages that set it apart from other multinational players: Stable tanker
rates from Indonesian cabotage law and higher international rates. BULL’s market share in Pertamina
is 16% for medium-range tankers and 40% for Aframax tankers. BULL has considerable international
operations with hefty international tanker rates compared to domestic tanker rates.

Figure 1. BULL total vessels

Source: BULL

Table 1. Financial highlights (USDmn)

2018 2019 3Q19 2Q20 3Q20 QoQ YoY 9M19 9M20 YoY
(%) (%) (%)
Revenue 85.4 101.5 26.0 54.9 46.7 -14.9 79.4 74.8 144.7 93.4
Oil 73.4 93.4 22.6 52.9 42.8 -19.1 89.6 66.7 137.2 105.8
Gas 16.9 14.7 4.0 3.6 3.8 5.3 -5.3 11.8 11.0 -7.4
Chemical 3.6 3.0 0.8 0.5 0.5 3.4 -32.3 2.3 1.7 -26.3
Others 2.6 3.3 0.3 0.4 0.3 -17.0 -5.1 1.2 1.0 -16.5
COGS 51.8 58.5 14.5 26.0 22.0 -15.5 51.5 42.2 67.9 61.0
Gross profit 33.6 42.9 11.5 28.9 24.7 -14.3 114.5 32.7 76.8 135.1
Operating expenses 8.1 10.0 2.1 2.3 2.4 5.0 13.4 6.8 7.4 8.0
EBITDA 42.6 53.1 14.0 36.3 28.7 -21.0 104.9 39.6 92.2 132.7
EBIT 25.5 32.9 9.4 26.5 22.3 -16.0 137.5 25.9 69.4 168.5
Net profit 13.5 21.0 4.3 12.2 9.3 -23.8 117.5 12.8 40.8 219.7

Gross margin (%) 39.3 42.3 44.2 52.6 52.9 43.7 53.1
EBITDA margin (%) 49.9 52.3 53.8 66.2 61.4 53.0 63.7
EBIT margin (%) 29.8 32.4 36.0 48.4 47.7 34.6 48.0
Net margin (%) 15.8 20.7 16.4 22.1 19.8 17.1 28.2
Net debt / EBITDA (x) 2.2 3.7 1.9 2.5
Source: BULL, Bloomberg, Mirae Asset Sekuritas Indonesia Research

Table 2. Higher international TCE rate lifted margins (USD)

Description 9M19 9M20 Change
LR2 tanker TCE rate 17.95/day 28.78/day 60.4%
Handy-sized tanker TCE rate 12..47/day 15.27/day 22.4%
Source: BULL, Mirae Asset Sekuritas Indonesia Research

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November 13, 2020 Buana Lintas Lautan Tbk

Figure 2. Market share in Pertamina 2019 (Aframax) Figure 3. Market share in Pertamina 2019 (medium-range)

24% 27%
BULL Waruna
42% 41%
SOCI SOCI
Waruna BULL

17% Others Others

16%

17% 16%

Source: BULL, Mirae Asset Sekuritas Indonesia Research Source: BULL, Mirae Asset Sekuritas Indonesia Research

Figure 4. Revenue Figure 5. Revenue breakdown

(USDmn) Others Chemical Gas Oil Others Chemical Gas Oil

160 144.7 100%

101.5 80%
120
85.4
74.8 60%
65.1
80 50.6 51.2
95%
40% 86% 92% 89%
86% 80%
80%
40
20%

0 0%
2015 2016 2017 2018 2019 9M19 9M20 2015 2016 2017 2018 2019 9M19 9M20

Source: BULL, Mirae Asset Sekuritas Indonesia Research Source: BULL, Mirae Asset Sekuritas Indonesia Research

Figure 6. Margins Figure 7. Aframax/LR2 time charter equivalent rate

Gross margin Operating margin Net margin Q1 Q2 Q3 Q4

60% 60,000
53%

48% 50,000
43% 42% 44%
42%
39%
40% 35% 40,000
32% 32%
29% 30% 30% 28%
30,000

20% 21%
17% 16% 17%
20% 20,000
13%

10,000
1%
0% 0
2015 2016 2017 2018 2019 9M19 9M20 2016 2017 2018 2019 2020

Source: BULL, Mirae Asset Sekuritas Indonesia Research Source: BULL, Mirae Asset Sekuritas Indonesia Research

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November 13, 2020 Buana Lintas Lautan Tbk

Figure 8. Trailing P/E band

(x)

100

80
+2 SD = 64.1
60

+1 SD = 41.2
40

20 Mean = 18.3

0 -1 SD = -4.6

-20
-2 SD = -27.6

-40
7/13
11/13
3/14
7/14
11/14
3/15
7/15
11/15
3/16
7/16
11/16
3/17
7/17
11/17
3/18
7/18
11/18
3/19
7/19

3/20
7/20
11/20
11/19
Source: Mirae Asset Daewoo Research

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November 13, 2020 Buana Lintas Lautan Tbk

APPENDIX 1

Important Disclosures & Disclaimers

2-Year Rating and Target Price History
Company (Code) Date Rating Target Price
(IDR) BULL Analyst's TP
BULL IJ Not rated
450

350

250

150

50
Nov-18 Nov-19 Nov-20

Stock Ratings Industry Ratings

Buy : Relative performance of 20% or greater Overweight : Fundamentals are favorable or improving
Trading Buy : Relative performance of 10% or greater, but with volatility Neutral : Fundamentals are steady without any material changes
Hold : Relative performance of -10% and 10% Underweight : Fundamentals are unfavorable or worsening
Sell : Relative performance of -10%
Ratings and Target Price History (Share price (─), Target price (▬), Not covered (■), Buy (▲), Trading Buy (■), Hold (●), Sell (◆))
* Our investment rating is a guide to the relative return of the stock versus the market over the next 12 months.
* Although it is not part of the official ratings at PT Mirae Asset Sekuritas Indonesia, we may call a trading opportunity in case there is a technical or short-term
material development.
* The target price was determined by the research analyst through valuation methods discussed in this report, in part based on the analyst’s estimate of future
earnings.
* The achievement of the target price may be impeded by risks related to the subject securities and companies, as well as general market and economic
conditions.

Equity Ratings Distribution

Buy Trading Buy Hold Sell
Equity Ratings Distribution 44.68% 31.91% 19.15% 4.26%
* Based on recommendations in the last 12-months (as of September 30, 2020)

Disclosures
As of the publication date, PT Mirae Asset Sekuritas Indonesia and/or its affiliates do not have any special interest with the subject company and do not own 1% or
more of the subject company's shares outstanding.

Analyst Certification
Opinions expressed in this publication about the subject securities and companie s accurately reflect the personal views of the Analysts primarily
responsible for this report. Except as otherwise specified herein, the Analysts have not received any compensation or any oth er benefits from the subject
companies in the past 12 months and have not been promised the same in connection with this report. No part of the compensation of the Analysts was,
is, or will be directly or indirectly related to the specific recommendations or views contained in this report but, like all employees of PT Mirae Asset
Sekuritas Indonesia, the Analysts receive compensation that is impacted by overall firm profitability, which includes revenue s from, among other business
units, the institutional equities, investment banking, proprietary trading and private clie nt division. At the time of publication of this report, the Analysts do
not know or have reason to know of any actual, material conflict of interest of the Analyst or PT Mirae Asset Sekuritas Indon esia except as otherwise stated
herein.

Disclaimers
This report is published by PT Mirae Asset Sekuritas Indonesia (“Mirae Asset”), a broker-dealer registered in the Republic of Indonesia and a member of the
Indonesia Exchange. Information and opinions contained herein have been compiled from sources believed to be reliable and in good faith, but such
information has not been independently verified and Mirae Asset makes no guarantee, representation or warranty, express or im plied, as to the fairness,
accuracy, completeness or correctness of the information and opinions contained herein or of any translation into English from the Bahasa Indonesia. If
this report is an English translation of a report prepared in the Indonesian language, the original Indonesian language repor t may have been made
available to investors in advance of this report. Mirae Asset, its affiliates and their directors, officers, employees and agents do not accept any liability for
any loss arising from the use hereof. This report is for general information purposes only and it is not and should not be construed as an offer or a
solicitation of an offer to effect transactions in any securities or other financial instruments. The intended recipients of this report are sophisticated
institutional investors who have substantial knowledge of the local business environment, its common practices, laws and accounting principles and no
person whose receipt or use of this report would violate any laws and regulations or subject Mirae Asset and its affiliates t o registration or licensing
requirements in any jurisdiction should receive or make any use hereof. Information and opinions contained herein are subject to change without n otice
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written consent of Mirae Asset. Mirae Asset, its affiliates and their directors, officers, employees and agents may have long or short positions in any of the
subject securities at any time and may make a purchase or sale, or offer to make a purchase or sale, of any such securities or other financial instruments
from time to time in the open market or otherwise, in each case either as principals or agents. Mirae Asset and its affiliate s may have had, or may be
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as well as up, and investors may realize losses on any investments. Past performance is not a guide to future performance. Fu ture returns are not

Mirae Asset Sekuritas Indonesia Research 5

November 13, 2020 Buana Lintas Lautan Tbk

guaranteed, and a loss of original capital may occur.

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