MDKA - Ride to Recovery and Future Growth Prospects

KBVS Update
Tuesday, 2 Apr 2024

Ride to Recovery and Future Growth Prospects 
(Downgrade HOLD - TP: IDR2,800)

MDKA recorded a net profit of US$3.1 mn in 4Q23, leading to a net loss of US$20.7 mn for FY23, below our and street's forecasts.Despite a strong 120% yoy revenue growth in 4Q23, MDKA experienced a 17.5% qoq revenue decline, resulting in a 31.7% yoy gross profit growth but a sharp 62.6% qoq decline to US$27.1 mn due to lower commodity prices.

We anticipates an earnings turnaround in 2024 for MDKA despite lower gold production and higher AISC for gold, with slight copper production improvement and lower AISC for copper. MBMA also provided guidance for higher ore and nickel sales amid lower nickel prices.

The Pani gold project presents significant economic value with peak gold production targets, low initial capex, and robust profitability estimates.The projected NPV for MDKA from the Pani Project stands at approximately US$1.3 bn, surpassing our EV/reserve valuation, potentially leading to a re-rating.

Despite recent share price surges, we downgrade MDKA to HOLD with a slightly lower target price of IDR2,800 based on a more conservative valuation approach.

Regards,
Benyamin Mikael -KBVS Research