EQUITY: METALS & MINING
Aneka Tambang
ANTM.JK ANTM IJ
15 August 2024
Anticipate stronger 2H recovery
Maintain Buy with revised TP of IDR1,900
Opportunity post MSCI exclusion backed by stronger fundamentals
ANTM recorded a strong earnings recovery in
, with profits surging 450% q-q and
479% y-y. Following the August rebalancing announcement, ANTM is set to be excluded
from the main MSCI index, where it previously held a 0.5% weight, translating into an
estimated outflow of USD50mn (equivalent to 15 days of ADTV). Despite this, we see a
positive opportunity ahead, supported by strong fundamentals and attractive valuations,
driven by: 1) a
>60%
increase in nickel ore sales in 2H (vs 1H)
following permit (locally
known as RKAB) approval, 2)
higher nickel ore ASP
following an HMA (Indonesia nickel
index) price lagging (
) with potential 5%-10% price premium due to a shortage caused
by weather disruptions, and 3)
gold margin improvement
post the buyback spree in 1H24
(which affected 1H24 margins), aided by stronger sales toward the end of the year.
We revised our FY24F EBITDA/earnings forecasts by +13%/+23%
Post 2Q24 results, we have revised our FY24F EBITDA and earnings forecasts by +13%
and +23%, respectively. This upward revision includes: 1) as increase in our nickel ore
sales estimate to 12mt (from 11mt), 2) a recovery in the FeNi plant, 3) adjusting NPAT to
incorporate forex gain in 2Q. ANTM managed to get a 23% reduction in FeNi cash costs
(~USD11,900/ton for 2Q) due to lower energy costs and potential to offload 3kt of FeNi
inventory in 3Q24F.
More inorganic growth story; maintain Buy with a higher TP of IDR1,900
ANTM is also pursuing inorganic growth opportunities, including the acquisition of a stake
in Tsingshan's (unlisted) nickel processing business, exploring new resources through an
IUP concession auction, and a potential agreement with PT Freeport Indonesia (unlisted)
to offtake 20 tons of gold from its cathode smelter (
). This move could improve the
gold trading margin, potentially reducing reliance on imported gold.
We maintain our Buy rating with a higher TP of IDR1,900 (IDR1,700 earlier), derived from
9x FY25F EV/EBITDA, at -0.5 SD of its 5Y average, implying 15x FY25F P/E. We are yet
to factored in its future projects in our valuation as we are waiting for more clarity. In the
current tight market of nickel ore, we are more constructive on nickel ore producers
including ANTM and MDKA IJ (Buy). Downside risks include a decline in the LME nickel
price, regulatory changes, and setbacks to future projects.
Rating
Remains
Buy
Target price
Increased from IDR
1,700
IDR 1,900
Closing price
14 August 2024
IDR 1,305
Implied upside
+45.6%
Market Cap (USD mn)
2,000.6
ADT (USD mn)
4.1
Relative performance chart
Source: LSEG,
Verdhana
Research Analysts
Indonesia Research Team
Year-end 31 Dec
FY23
FY24F
FY25F
FY26F
Currency (IDR)
Actual
Old
New
Old
New
Old
New
Revenue (bn)
41,048
54,114
56,131
61,659 63,556
66,885
69,217
Reported net profit (bn)
3,078
2,271
2,797
2,803
3,092
3,332
3,544
Normalised net profit (bn)
3,078
2,271
2,797
2,803
3,092
3,332
3,544
FD normalised EPS
128.08
94.48
116.38
116.64 128.66
138.67
147.48
FD norm. EPS growth (%)
-19.5
-26.2
-9.1
23.4
10.6
18.9
14.6
FD normalised P/E (x)
10.2
–
11.2
–
10.1
–
8.8
EV/EBITDA (x)
4.8
–
5.5
–
4.7
–
4.0
Price/book (x)
1.0
–
1.0
–
1.0
–
0.9
Dividend yield (%)
9.8
–
4.5
–
4.9
–
5.7
ROE (%)
11.3
7.5
9.2
9.1
9.9
10.3
10.7
Net debt/equity (%)
net cash net cash net cash net cash net cash net cash net cash
Source: Company data,
Verdhana
estimates
Michael Wildon Ng
Michael.wildon@verdhana.id
+62 (81219597829)