You can contact the author (Teguh Hidayat) by email, The author live in Jakarta, Indonesia.

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Time to Buy Coal Stocks?

When this article was written, the Jakarta Composite Index (JCI) is in a position of 4,717, dropped almost 10% since the beginning of this year. In a condition like this, of course almost all shares on the Indonesia Stock Exchange (IDX) has been dropped. But interestingly, based on IDX stats, the index of mining sector has plunged 27.2% during 2015, the worst compared to any other sectors, while in fact the stocks in this sector have gone down a lot in previous years. Some mining stocks, or in this case, coal stocks, even fell more than 90%, if calculated from their peak position in 2011.

Sinarmas Acquired Berau Coal: Why?

Indonesian largest but -on the other hand- also most indebted coal company, Bumi Resources (BUMI), has just released its financial statements for the period of first quarter of 2015 (late as usual). And the result? Well, it’s just getting worse. BUMI reported a net loss of US$ 344 million, leading to a capital deficiency of US$ 1.2 billion. On its balance sheet, from US$ 5.7 billion of liabilities of the company, US$ 3.6 billion of which are bank debts that will mature in less than one year. With the current conditions where the coal price is still falling down, how could BUMI repay those short-term debts?

Chinese Stocks Plunged, What Happened?

On June 12, 2015, having just scored another new high at 5,178, The Shanghai Stock Exchange Index (SSE) suddenly fell.. and continue to fall until reached 3,383 on July 9, or dropped more than 30% in just less than a month! The stock index were dropped so quickly, to the extent that investors from around the world, including from Indonesia, raise the question: What is really going on in China? Is it true that there was a crisis?

When Capital Gain Is Not Everything

In value investing, there is a very popular term ie intrinsic value of stock. According to Opa Warren, intrinsic value of a stock/company is the value of net asset/equity of the company plus the accumulation of net income that can be acquired in the future, ie as long as the company operates. Thus, when you see that the equity value of company A is US$ 100 million, for example, and there is a strong assumption that the company will be able to generate a decent and consistent earnings over the long term, then the intrinsic value of the company is usually greater than the equity.