Company Update / Metals / IJ / Click here for full PDF version
Author(s): Ryan Winipta ; Reggie Parengkuan
- We think is poised for a valuation re-rating, supported by potentially massive NP growth in FY26F (+64% yoy) to ~Rp15tr.
- NPI price has gone up by +19% YTD, while MHP margin expanded to above ~US$10k/t (from US$6k/t on average) driven by better pricing.
- We expect nickel price to at least sustain throughout FY26F with higher price acting as further upside. Upgrade our TP to Rp2.1k/share.
Attractive earnings growth potential, driven by higher ASP
We think shall be able to record +64% NP growth in FY26F, mainly driven by higher ASP on their RKEF , as NPI has been up by +19% YTD to ~US$13-14k/t level. Meanwhile, on the associate income level (i.e. HPL & ONC), HPAL margin is set to expand further, driven by higher cobalt price (+6% YTD), which shall translate into lower HPAL cash costs - as cobalt credit would act as reduction to cash costs, in addition to higher MHP price (+9% YTD) and NiSO4 price (+17% YTD). Our channel-check has indicated that HPAL margin has already went above ~US$10k/t, despite the recent rise in sulphur price, while NPI margin stood around US$2.5k/t in Jan26 (double vs. 4Q25), which shall bode well for 's RKEF & HPAL as well.
Further upside: dividend payout & higher ASP
One of the primary upside to our NP forecasts would be higher ASP, as every 1% positive change in our FeNi/MHP/NiSO4 assumptions, 's net profit rose by +1.8%/+0.5%/+0.3%, respectively. In terms of dividend, based on FY25F NP, 30% dividend payout ratio (DPR) shall translate into c.3% dividend yield. We think there could be further upside in DPR, as the plan for KPS Phase 3 (addl. FeNi 60ktpa capacity) is yet to be firm, in which capex would only be in the form of maintenance capex, enabling ample cash balance for dividend. Note that 30% DPR based on our FY26F earnings estimate should translate to c.5% yield at current share price.
Primary downside risk is lower RKAB quota approval
Biggest downside risk for would be lower RKAB quota approval. Based on recent RKAB approval that have been obtained by other miners, integrated smelters have less likelihood to get its quota cut. Additionally, ore shortage & higher premium could act as additional risk given that still purchase ~30% of its required saprolite from 3rd party
Maintain Buy rating with higher TP of Rp2,100/share
We upgrade FY26F/27F NP forecast by +55%/59% as we set higher nickel ASP assumptions (Fig. 2), respectively. We think shall trade at least to FY26F 9x P/E, vs. peers 11-26x P/E. We raised our TP to Rp2.1k/share (from Rp1.5k/share) based on FY26F 9x target P/E as we expect P/E to re-rate from 6.5x currently due to strong earnings growth profile.
Sumber : IPS