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Strength
Positive growth in 3Q24 production (to 18,008 tons; +8.6% QoQ, +0.3% YoY) and sales volumes (17,749 tons;+1.0% QoQ, +3% YoY), driven by improvement in average nickel ore grade to 1.79% (+4% QoQ) thanks to increased calcine output
Weakness
Considerable decline in 3Q24 earnings due to decreased ASP to USD 12,948/ton (-8.9% QoQ, -20.1% YoY), which led to cash margin reduction to USD 2,974/ton (-31.0% QoQ, -51.8% YoY); low cash margins resulted in OPM drop to 2.7% (-1,100 bps QoQ, -1,860 bps YoY)
Opportunity
INCO’s pilot ore sales program (subject to RKAB approval) and planned commercialization of its RKEF and HPAL smelters (2026F) could serve as positive catalysts for future earnings growth; severe market underperformance could provide investors with buying opportunities
Threat
Global oversupply issue, weak demand outlook for stainless steel in China, and LFP battery ramp-up signal further pressure on prices; lack of growth catalyst and disappointing margins prompt us to cut our call to SELL with TP of IDR 3,400, reflecting 34.0x 2025F P/E; this may cause continued market underperformance
Samuel Sekuritas Indonesia is a leading Indonesian securities brokerage firm. Established in 1997, the firm has grown to become one of the most respected and trusted financial services companies in the country. With a wide range of services and products, Samuel Sekuritas Indonesia has become a trusted partner to many investors, both institutional and individual.
The company offers a variety of financial services, including equity, debt and derivative securities brokerage services, research and portfolio management, asset management and capital market services, as well as a range of other investment solutions. Samuel Sekuritas Indonesia is also a leader in providing financial education and training, and has established itself as a leading provider of investor relations services.
The company has a strong research capability and is committed to providing its clients with up-to-date and reliable market analysis and recommendations. It also has a team of experienced and knowledgeable professionals who are dedicated to providing quality service to its clients. As a result, Samuel Sekuritas Indonesia has become a preferred partner for many investors in Indonesia.
In addition to its financial services, Samuel Sekuritas Indonesia also offers a range of other services, such as corporate finance and advisory services, mergers and acquisitions, and venture capital.
