United Tractors Still printing excess FCF even after earnings cuts; maintain OW

Research evidence excerpt

J P M O R G A N

Asia Pacific Equity Research

06 August 2026

United Tractors

Overweight

Still printing excess FCF even after earnings cuts;

maintain OW

UNTR.JK, UNTR IJ

Price (04 Aug 26):Rp24,000

▼Price Target (Jun-27):Rp30,200

Prior (Jun-27):Rp42,000

Indonesia Equity

UNTR’s share price has experienced volatility since our upgrade in Apr-26,

underperforming the JCI by 7% from May to early June and falling over 30% in

absolute terms. The decline followed a negative surprise in Martabe’s 2027 gold

production outlook. From early June to the pre-print 2Q26 results, UNTR

outperformed the JCI by 3-4%, mainly due to share buybacks. However,

disappointing 2Q26 results triggered a further 10% underperformance, though

2Q26 likely marks the trough as Martabe resumed production in May. We have

reduced our 2026-28E core earnings estimates by 9-25%, with steeper cuts for

2027 as we lower Martabe production volumes to 80k oz and gold price

assumptions to $4,000/oz. Our SOTP-based price target drops 28% to Rp30,200/

sh. We maintain our OW rating as UNTR’s 2027-28E excess free cash flow after

dividends remains attractive at around 7-10% of market cap, a re-rating catalyst to

support Astra’s target of low-teens annual total shareholder return in the medium

term (see Benny’s report on Astra’s strategic review).

2Q26 marks the trough. After the 1H26 results, we anticipate limited further

negative surprises. The stock has already absorbed several setbacks, including

Martabe’s weaker 2027 production guidance, a full impairment of geothermal

assets, and coal production quota cuts. We have reduced our 2027 earnings

estimate by 25%, mainly due to the gold business, bringing our estimate

broadly in line with consensus. Our forecast now assumes 80k oz Martabe

production in 2027 due to the limited tailing storage capacity. Expansion is

expected to begin in 3Q26 and will likely take 12 months to complete. We have

also lowered our gold price forecast to $4,000/oz for conservatism and expect

a gradual decline in Martabe’s gold grade from 1.2g/t to 1.0g/t over the long

term. These adjustments reduce Martabe’s NPV by 34% to $1.6bn and lower

UNTR’s SOTP by 15%.

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