INCO - 2Q25 missed: cost pressure overrides volume gains

INCO - 2Q25 missed: cost pressure overrides volume gains Vale Indonesia (INCO) booked a weak 2Q25 net profit of USD3.5 mn (-84.2% qoq, -88.9% yoy), well below our and consensus estimates, hit by elevated production costs from a 20-day maintenance, absence of 1Q25’s one-off gains, and weaker margins despite higher revenue at USD220 mn (+6.6% qoq, -11.5% yoy) as higher nickel matte deliveries (+5.4% qoq, +8.7% yoy) and ASP (+1.3% qoq) failed to offset the cost surge. Cash fell to USD507 mn due to heavy capex and dividend payouts. (Source : Company) Comment : While revised RKAB for 2.2 mn tons of Bahodopi ore could lift 2H25 performance, we expect to revise our view lower amid compressed margins, regulatory overhang, and persistent operational headwinds. Our previous TP: IDR4,300 (7x 2025F EV/EBITDA, 1x P/BV).