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
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