ITMG is holding USD 871 million in cash with no significant debt, sparking speculation about its next strategic move.
In 2022, ITMG successfully recorded the largest net profit in the Company’s history, amounting to USD 1.2 billion. That year, ITMG decided that the amount of dividends distributed would continue to follow the payout ratio policy that has been in place since 2007, namely 60% of net profit. As a result, as of Q3 2023, the Company was still holding a very significant amount of cash, totaling USD 871 million.
The question is: what is all that cash being kept for? Especially considering that ITMG does not have any major debt obligations. Its capital structure is already very strong. The Company’s current ratio has consistently remained at around 1.5 over the past decade. Even back in 2018, when the Company also generated relatively high profits, it chose to distribute all of its earnings without retaining excessive cash.
The Company has not yet provided detailed information regarding what it plans to do with this cash. However, there has been a small hint from management. In May 2023, ITMG’s Director of Investor Relations and Corporate Communications stated that the Company was exploring potential acquisitions of nickel mines or other mineral assets and had already held discussions with several companies. However, as of the time this article was written, no related corporate actions had been executed.
Meanwhile, other coal mining companies such as HRUM and UNTR have already diversified earlier by acquiring nickel mining assets.
In fact, ITMG began expressing the need for diversification as early as 2016 in its annual report. Then in 2017, ITMG clearly articulated its diversification vision: to become a provider of sustainable and affordable energy.
The Company aims to expand both vertically and horizontally, from upstream to downstream, across both its conventional coal energy business and renewable energy ventures.
