United Tractors Launches $126 Million Share Buyback as Coal Uncertainty Weighs on Operations

JAKARTA, Investortrust.id — PT United Tractors Tbk (UNTR), Indonesia's largest heavy equipment distributor and mining contractor controlled by PT Astra International Tbk (ASII), will launch a Rp2 trillion ($126 million) share buyback as the company seeks to stabilize its stock price amid heightened market volatility.

The repurchase program comes as Indonesia's mining sector continues to grapple with uncertainty surrounding government approvals for coal production plans, weighing on several of United Tractors' core businesses.

The buyback signals management's confidence in the company's long-term fundamentals despite one of the toughest periods for Indonesian equities in years.

It also reflects a growing trend among listed Indonesian companies using excess cash to support share prices as foreign investors continue reducing exposure to the country's stock market.

$126 Million Buyback to Support Shares

United Tractors said the buyback will be financed entirely from internal funds, with no borrowing or proceeds from public offerings.

The company said the program is intended to strengthen investor confidence in the intrinsic value of UNTR shares while providing greater flexibility in managing its long-term capital structure.

The repurchase will run from July 1 through Sept. 30, 2026, for a maximum period of three months.

Management said the number of shares repurchased will not exceed 20% of issued and paid-up capital, while the company's public free float will remain above the regulatory minimum of 15%.

United Tractors added that the buyback is not expected to have a material impact on earnings, operations or financial health, saying it maintains sufficient capital and cash flow to fund business expansion alongside the repurchase program.

Coal Permit Uncertainty Continues to Weigh

Although United Tractors' overall operating performance remains broadly in line with expectations for 2026, analysts say uncertainty surrounding Indonesia's Work Plan and Budget (RKAB) approvals continues to disrupt mining activity.

According to analysts Erindra Krisnawan and Kafi Ananta of BRI Danareksa Securities, delays in RKAB approvals remain the primary headwind affecting the company's mining contractor PT Pamapersada Nusantara (PAMA), Komatsu heavy equipment sales and coal mining operations.

PAMA's overburden removal volume fell 18% year over year in May, contributing to a 16% decline in total mining activity, while coal production slipped 4%.

Even so, cumulative mining volumes during the first five months of 2026 remained 3% above the brokerage's full-year pro-rata forecast, while coal production exceeded expectations by 12%.

Komatsu Sales Hit Hard

The biggest weakness came from United Tractors' Komatsu distribution business. Heavy equipment sales plunged 40% year over year in May, with deliveries to mining customers collapsing 83% as coal producers postponed capital expenditure amid regulatory uncertainty.

For the January-May period, total Komatsu sales declined 28%, while mining-related equipment sales dropped 52%. BRI Danareksa said stronger demand from Indonesia's plantation and construction sectors helped offset part of the weakness.

Gold Business Shows Signs of Recovery

Coal sales also remained under pressure, falling 59% year over year in May.

However, cumulative coal sales for the first five months of 2026 declined only 6%, remaining 17% above analysts' full-year assumptions.

The brokerage also highlighted improving prospects for United Tractors' gold business after operations at the Martabe Gold Mine, one of Indonesia's largest gold mines, resumed normal production.

"The acceleration in production during the second half of 2026 will be the key factor to watch, with May marking the starting point of the recovery," BRI Danareksa Securities said in its research note.

Despite ongoing challenges across the mining sector, the brokerage maintained its Buy recommendation on UNTR shares with a target price of Rp30,600.