INCO - The Nickel Chronicles: INCO’s Next Chapter in Ore and HPAL Ventures

KBVS Update
Thursday, 14 November 2024

INCO - The Nickel Chronicles: INCO’s Next Chapter in Ore and HPAL Ventures
(Reinitiate HOLD - TP: IDR4,300)

■ INCO’s 9M24 revenue declined by 24.5% yoy to USD709mn, with net profit down to USD51 mn (-76.9% yoy) due to lower ASP (-28.7% yoy), despite higher production. Rising HSFO costs and USD3.6mn in on-Tax State Revenue (PNBP) added to the impact.

■ Future growth is expected from high-grade ore (1.79%), projected HPAL ventures (80% of net profit by 28F), and anticipated higher nickel prices, although production and timeline adjustments in HPAL Sambalagi have been less than anticipated.

■ Reinitiating HOLD with a target price of IDR4,300 (7x '25F EV/EBITDA, 1.3x '25 P/BV), with projected bottom-line gains of +156.7% yoy in 26F and +42.8% yoy in 27F, driven by HPAL projects and larger nickel demand fueled by EV adoption.

Regards,
Laurencia Hiemas - KBVS Research