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A Geothermal Marvel

Archaeological evidence shows that the first human use of geothermal resources in North America occurred more than 10,000 years ago with the settlement of Paleo-Indians at hot springs. The springs served as a source of warmth and cleansing, their minerals as a source of healing.

While people still soak in shallow pools heated by the earth, engineers are developing technologies that will allow us to probe more than 10 miles below the earth's surface in search of geothermal energy.

In Indonesia, the exploration of geothermal energy began as early as 1974 with the pioneering Kamojang project in West Java, which continues to operate to this day. Indonesia's geographical luck, being situated in the Ring of Fire, translates to possessing approximately 40% of the world's geothermal reserves, with much of this potential still untapped beneath the Earth's surface.

We felt fortunate as we had the opportunity to visit one of the largest geothermal operators in the world under the umbrella of PT Barito Pasific Tbk : Star Energy Geothermal.

Our one-day trip took us to Wayang Windu in West Java, one of their three assets capable of generating 230.5MW out of a total of 886MW. Observing the 113.5MW and 117MW units in action, granted us valuable insights into the impressive scale and efficiency of their geothermal operations.

This has shown us the significant contribution that Star Energy Geothermal makes to Indonesia's energy landscape. Hence, we believe the future that BREN offer is still attractive.

We believe some investors may have the same view with us if we take a look at JCI top 10 members by its weight to JCI with BREN being in the 4th. This may have forced some investors and fund managers to pay attention to the stock regardless if the fundamentals fits the investing universe when.

Having said that, we should not forget that valuation issue remains unresolved. As of the closing of May 27th, BREN valuation when compared to the top 10 JCI members proven to be one of the highest.

Therefore, we recommend to maintain underweight to neutral stance on the stock considering the significant impact it has on JCI performance.


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