First Eagle Global Real Assets Fund on PT United Tractors Tbk
Thesis
United Tractors is Indonesia's largest contract miner and heavy-equipment distributor, with businesses spanning mining contracting, coal and gold mining, construction machinery, industrial construction and renewable energy. Shares weakened because investors feared regulatory changes could damage Indonesia's mining industry and reduce the value of the company's mining-related operations. The fund remains constructive because the shares trade at a discounted valuation while the underlying mining businesses remain strong. Indonesia's strategic mineral resources and a group-wide program to improve operating performance and valuation provide additional elements of the thesis.
“We remain constructive in light of a discounted valuation, the strength of the company’s mining businesses”
Key risks
- Regulatory changes in Indonesia could impair the domestic mining industry and United Tractors' mining-related businesses.