INCO - 9M24 missed results despite strong production

INCO - 9M24 missed results despite strong production Vale Indonesia (INCO) posted a 3Q24 revenue of USD230 mn (-7.6% qoq, -17.6% yoy), bringing 9M24 to USD709 mn (-24.5% yoy), above our estimates (79.35%) but slightly below consensus (74.26%), impacted by lower ASP of USD12,948/ton (-8.9% qoq, -20.1% yoy). Production volume rose to 18,008 metric tons (+8.6% qoq, +2% yoy), due to higher nickel ore grade of 1.79% (+4% qoq). EBITDA dropped to USD47 mn (-35.2% qoq, -55.1% yoy), due to lower nickel matte prices and increased HSFO consumption during September maintenance. Net profit for 3Q24 was USD14 mn (-55.5% qoq, -73.7% yoy), totaling USD51 mn for 9M34 (-76.9% yoy), well below our estimates (60.84%) and consensus (58.15%). (Source : Company, KBVS Research) Comment : Given recent results, we find it prudent to revise our target price to reflect lower nickel prices and higher costs impacting EBITDA. Despite solid production, profitability pressures persist. INCO has already accrued 2024 IUPK expenses, addressing the worst-case scenario with potential for accrual reversal.