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We expect NCKL to book better earnings in 2H23 than in 1H23, supported by these catalysts: 1.) Three new production lines in its RKEF projects (which was completed in 2Q23) are expected to run at full capacity in 3Q23. Hence, we expect HJF’s FeNi production volume to increase to 41k tons (+74.5% HoH) in 2H23, and 2) Lower cash cost thanks to the potential decline in energy cost. We revised down our cash cost projections for NCKL’s HJF and MSP smelters by -12.5% and -6.0%, respectively, considering that HJF managed to record a cash cost of USD 9,677 in June 2023. In light of all these factors, we raised our projections for NCKL's net profit in 2023F and 2024 by 20.2% and 18.0%. We reiterate our BUY rating on NCKL, with a higher TP of IDR 1,500 per share (prev: IDR 1,100/share).
Recovery of NPI. Nickel Pig Iron (NPI) prices have recovered to USD 14K/ton in 2H23, after dropping to USD 12K/ton in 1H23. Meanwhile, according to Bloomberg News, Indonesia’s nickel ore prices have gone up in recent weeks, mainly due to the government’s decision to suspend new mining quotas. We believe NCKL have a comparative advantage against its peers, as we see the recent surge in price will indirectly benefit NCKL (whose raw materials come from its own mine, reducing the impact of price fluctuations).
Lower cash cost + higher sales volume: better earnings. We expect NCKL to book better earnings in 2H23 than in 1H23, supported by these catalysts: 1.) Three new production lines in its RKEF projects (which was completed in 2Q23) are expected to run at full capacity in 3Q23. Hence, we expect HJF’s FeNi production volume to increase to 41k tons (+74.5% HoH) in 2H23, and 2) Lower cash cost thanks to the potential decline in energy cost.
Forecast adjustments; BUY with a higher TP of IDR 1,500/share. We revised down our cash cost projections for NCKL’s HJF and MSP smelters by -12.5% and -6.0% in 2023F, respectively, considering that HJF managed to record a cash cost of USD 9,677 in June 2023. In light of all these factors, we raised our projections for NCKL's net profit in 2023F and 2024 by 20.2% and 18.0%. We roll over our valuation to 2024F, and we reiterate our BUY rating on NCKL, with a higher TP of IDR 1,500 per share (prev: IDR 1,100/share).
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.
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