INCO
Contact our analyst Revita
8.4% upside, Hold
3rd February 2023
Price Rp 7350
Target price Rp7970
3rd February 2023
Price Rp 7350
Target price Rp7970
Produced 60,090 metric tons of nickle in matte
INCO has announced that production of nickel in matte during 2022FY was 60,090 metric tons, down -8.1% YoY compared to 2021FY’s 65,388 metric tons. The annual production was slightly lower than our forecast of 61,000 metric tons. 4Q22 production reached 16,183 metric tons, which is -8% lower than in 3Q22. The decline is mainly due to progress of the Furnace 4 Rebuild project in 1H22. This was somewhat offset by better than expected production from furnace 1, 2, and 3. We adjust our forecasts for revenue 2022-2023F to USD 1,239 million and USD 1,301 million respectively.
Maintaining cost
Based on annual 2022 production, INCO continues to maintain its focus on improving productivity and cost efficiency to sustain competitiveness in the long term. This is despite higher cost of revenues in 3Q22 from energy expenses and royalties. As of 3Q22, INCO booked EBITDA of USD 103.0 million, -37% lower than EBITDA in 3Q22 of USD163.4 million due to lower nickel prices. Fuel and lubricant costs in 3Q22 increased 99% YoY. But with lower raw material prices now, we maintain our forecast for cast/ton to decline by -14.23% YoY in 2023.
Valuation: 8.4 % upside
We maintain our target price within one year at IDR 7,970 due to the rising nickel price despite lower production volume in 2022. With only 8.4%% upside, our recommendation is HOLD..
INCO has announced that production of nickel in matte during 2022FY was 60,090 metric tons, down -8.1% YoY compared to 2021FY’s 65,388 metric tons. The annual production was slightly lower than our forecast of 61,000 metric tons. 4Q22 production reached 16,183 metric tons, which is -8% lower than in 3Q22. The decline is mainly due to progress of the Furnace 4 Rebuild project in 1H22. This was somewhat offset by better than expected production from furnace 1, 2, and 3. We adjust our forecasts for revenue 2022-2023F to USD 1,239 million and USD 1,301 million respectively.
Maintaining cost
Based on annual 2022 production, INCO continues to maintain its focus on improving productivity and cost efficiency to sustain competitiveness in the long term. This is despite higher cost of revenues in 3Q22 from energy expenses and royalties. As of 3Q22, INCO booked EBITDA of USD 103.0 million, -37% lower than EBITDA in 3Q22 of USD163.4 million due to lower nickel prices. Fuel and lubricant costs in 3Q22 increased 99% YoY. But with lower raw material prices now, we maintain our forecast for cast/ton to decline by -14.23% YoY in 2023.
Valuation: 8.4 % upside
We maintain our target price within one year at IDR 7,970 due to the rising nickel price despite lower production volume in 2022. With only 8.4%% upside, our recommendation is HOLD..
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