PT United Tractors Tbk. (UNTR) has invested approximately USD 1 billion to expand into the nickel sector.
United Tractors (UT) is aggressively pursuing business diversification, aiming to reduce its dependence on coal commodities. One of the key strategies in this diversification effort is expanding its business into the nickel mining sector, a commodity considered to have promising prospects.
The expansion into the nickel sector by United Tractors has also attracted attention from Jardine Cycle & Carriage Ltd., the controlling shareholder of PT Astra International Tbk. (ASII).
In its presentation, Jardine's management emphasized the vast potential of Southeast Asia, asserting that they are well-positioned to capitalize on this opportunity. Jardine cited Indonesia, which has significant nickel reserves, as their largest market. Leveraging the growth prospects of this industry, United Tractors is estimated to have invested USD 1 billion in the nickel business in 2023.
When asked for confirmation, United Tractors' Corporate Secretary Sara K. Loebis affirmed that UT's total investment in nickel was approximately USD 1 billion in 2023. She explained that the funds were used to acquire ore mines and equity investments.
"With the addition of the nickel business line, we hope to create more balance in UT's revenue streams, particularly from non-coal businesses," she said in an interview with Bisnis on Thursday, August 8, 2024.
As of the end of the first half of 2024, UNTR's nickel mining segment includes PT Stargate Pacific Resources (SPR), which was recently acquired with a majority ownership in December 2023, and Nickel Industries Limited (NIC), which was acquired in September 2023 with a 19.99% ownership.
SPR operates a nickel mine in North Konawe, Southeast Sulawesi. NIC, on the other hand, is an integrated nickel mining and processing company with its primary assets located in Indonesia.
In the first half of 2024, SPR recorded sales of 967,000 wet metric tons (wmt) of nickel ore, consisting of 421,000 wmt of saprolite and 546,000 wmt of limonite.
NIC, meanwhile, achieved sales of 34,427 tons of nickel metal in the fourth quarter of 2023 and 32,759 tons of nickel metal in the first quarter of 2024.
United Tractors' gold and other mineral mining segments reported a 17% year-on-year revenue growth, reaching IDR 4.4 trillion in the first half of 2024.
Komatsu united tractors (UNTR)
Stock Recommendation Revisions for UNTR
Several securities firms have revised their recommendations for UNTR's stock following the release of the company's financial performance for the first half of 2024.
Arief Budiman, Head of Research at Ciptadana Sekuritas Asia, noted that United Tractors posted a 10% quarter-on-quarter net profit growth, reaching IDR 4.98 trillion in the second quarter of 2024.
Ciptadana highlighted that this achievement was primarily supported by stronger margins across all business lines on a quarterly basis, although the annual margins were lower due to coal prices.
Cumulatively, Arief mentioned that UNTR's net profit declined by 15% year-on-year to IDR 9.5 trillion in the first half of 2024. This performance is considered in line with the lower revenue and margins.
"Nevertheless, this achievement was above our expectations and consensus," he said in a research note quoted on Thursday, August 1, 2024.
Ciptadana noted that UNTR's net profit for the January to June 2024 period has already reached 55% of their and the consensus estimates for the year.
Ciptadana decided to revise its target for UNTR's stock price upward to IDR 30,500, maintaining a "buy" recommendation.
BRI Danareksa Sekuritas also recently revised its rating for UNTR's stock to "buy" on Wednesday, July 31, 2024. Their target price is IDR 29,200.
It is worth noting that United Tractors recorded a revenue of IDR 64.5 trillion for the January to June 2024 period, reflecting a 6% year-on-year decline from IDR 68.6 trillion in the same period last year.
In line with the revenue decline, UNTR's net profit fell by 15% year-on-year to IDR 9.5 trillion in the first half of 2024.
