Shares of PT Darma Henwa Tbk shifted higher after the Indonesian mining contractor posted a 34.6% jump in Q1 2026 net profit to IDR 92.71 billion, even as revenue slipped. The stock rose to IDR 510, up 2.82% from its April 30 close, extending a rally that has taken it from a 52-week low of IDR 112 to current levels. The result looks strong on the surface — but the engine behind it deserves scrutiny.

  • The Profit Boost Came From Lower Taxes, Not Bigger Sales

The main driver was a drop in cost of revenue that outpaced a revenue decline, combined with net tax expenses plunging from IDR 60.4 billion to IDR 23.9 billion — a 60% cut that flowed directly to the bottom line. That means profits grew largely because the company spent less and paid less tax, not because it earned more. Investors should ask whether this tax benefit recurs or was a one-quarter anomaly.

  • A Massive Buyback Is Draining Cash Reserves

Cash shrank from IDR 1.59 trillion to IDR 486.8 billion after the company allocated roughly IDR 791.4 billion to share buybacks in Q1 alone, driving an 8.13% decline in equity. Management is signaling confidence in the stock's intrinsic value, but the move leaves the current ratio — a measure of a company's ability to cover near-term bills — below 1x, meaning short-term liabilities exceed liquid assets.

  • The Stock Is Already Priced for Big Growth

DEWA's valuation sits at a premium versus mining-contractor peers, with a price-to-book ratio of 2.58x reflecting heavy growth expectations.

On a forward basis, the stock trades at an EV/EBITDA of 8.5x — nearly triple the sector average of 3.0x — justified by analysts only if earnings-per-share growth hits +132.4% in FY2026.

  • Bringing Equipment In-House Is the Real Story to Watch

DEWA is shifting from relying on subcontractors to using its own mining fleet, targeting an internal contribution of 89.3% by 2027 versus 45.6% in 2024, which analysts project could expand EBITDA margins from 14.2% to 40.9%. If that transition executes on schedule, today's premium valuation has a case. If fleet deliveries stall or coal demand softens, the math unravels quickly. Investors need to see consistent cost efficiency to justify these elevated prices going forward.