INCO
Contact our analyst Revita
1.33% upside, HOLD
7th January 2022
Price Rp4510
Target price Rp4570
7th January 2022
Price Rp4510
Target price Rp4570
Lower production target
INCO is lowering their production volume target to 65,000 MT of nickle in matte in 2022 or slightly higher than 2021’sr production volume estimate of 64,497 MT. The decrease in 2022’s production is due to maintenance (rebuild) of electric furnace no. 4 which was delayed from 2021. Lower 20/1 production volume of 13% yoy was also caused by furnace maintenancre. This lower production volume was offset by a 38% yoy increase in the average price which led revenue to grow +20% yoy. We expect 2022F average price will likely weaken as supply will exceed demand but the potential implementation of a nickel ore export ban may help. INCO will also continue to work on cost efficiency. As a result, we have adjusted our revenue forecasts for 2021-2022 to US$945 mn and US$1018 mn respectively.
Progress on expansion
The Bahodopi and Pomala projects are expected to have come to an investment decision by the end of 2021. The future Bahodapi plant where INCO plans to process Saprolite nickel ore (a main ingredient of stainless steel), is estimated to have reached the final investment decision (FID) with their choosen partner from China. Meanwhile the AMDAL permit for the Pomala location is targeted to be received in 2022.
Valuation: 1.33% upside
We downgrade our TP within one year to IDR. 4,570. With 1.33% upside, our recommendation is HOLD.
INCO is lowering their production volume target to 65,000 MT of nickle in matte in 2022 or slightly higher than 2021’sr production volume estimate of 64,497 MT. The decrease in 2022’s production is due to maintenance (rebuild) of electric furnace no. 4 which was delayed from 2021. Lower 20/1 production volume of 13% yoy was also caused by furnace maintenancre. This lower production volume was offset by a 38% yoy increase in the average price which led revenue to grow +20% yoy. We expect 2022F average price will likely weaken as supply will exceed demand but the potential implementation of a nickel ore export ban may help. INCO will also continue to work on cost efficiency. As a result, we have adjusted our revenue forecasts for 2021-2022 to US$945 mn and US$1018 mn respectively.
Progress on expansion
The Bahodopi and Pomala projects are expected to have come to an investment decision by the end of 2021. The future Bahodapi plant where INCO plans to process Saprolite nickel ore (a main ingredient of stainless steel), is estimated to have reached the final investment decision (FID) with their choosen partner from China. Meanwhile the AMDAL permit for the Pomala location is targeted to be received in 2022.
Valuation: 1.33% upside
We downgrade our TP within one year to IDR. 4,570. With 1.33% upside, our recommendation is HOLD.
Previously
