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INCO

Contact our analyst Revita
13% upside, Hold
28th July 2023
Price Rp 6725
Target price Rp7585
Double digits production growth
INCO reported strong 2Q23 production of 16,922 metric tons of nickel in matte, up +35% YoY compared to 2Q22 and higher than management forecasts. The increase was attributed to improved productivity after successful furnace repairs in 1Q23. 1H23 total production reached 33,691 metric tons, a +28% YoY increase due to the furnace 4 rebuild in the previous year. INCO initiated a maintenance shutdown in June 2023, with plans to complete it by July 2023.

Lower costs
To sustain competitiveness, INCO remains focused on improving productivity and cost efficiency. Cost of revenues in 2Q23 was lower than in 1Q23, helped by lower energy expenses and royalties. Forecast cost/ton is expected to decline by -13.70% YoY in 2023 to USD 10,077/ton.

Revenue to grow 5%
Our revenue forecasts for 2023-2024F are USD 1,259 million and USD 1,311 million, respectively, which is a CAGR increase of 5% over those two years, mainly from expected higher production and despite potential commodity price volatility.

Valuation: 13% upside
With our forecasts for lower nickel prices but higher production volume in 2023, we maintain our target price within a year at IDR 7,585. With 13% potential upside, our  recommendation remains HOLD.

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Previously
INCO Apr2023​
​INCO Feb2023
​INCO Nov2022
​INCO Aug2022
​INCO May2022
​INCO Jan2022
​INCO Mar2021
​INCO Nov2020
​INCO Aug2020
​INCO Feb2020
​INCO Nov2019
​INCO Sep2018
 ​INCO,​ 10th Nov 2017
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