PT Trimegah Bangun Persada Tbk (NCKL), also known as Harita Nickel, and PT Timah Tbk (TINS) are projected to be two promising metal issuers in the industry, driven by operational strengthening at NCKL and the declining tin ore exports from Myanmar to China, which benefits TINS.
BRI Danareksa Sekuritas analysts Timoty Wijaya and Christian Sitorus predict that NCKL's performance during the first nine months of this year will remain robust, despite the slowdown in China’s industrial and manufacturing activities. NCKL's resilience is supported by a 3% quarter-on-quarter increase in the price of nickel pig iron (NPI), or low-grade ferronickel.
In addition to this, NCKL’s solid performance is further reinforced by its sales of limonite to PT Obi Nickel Cobalt (ONC), which have been ongoing from May to August 2024. The two analysts estimate that NCKL’s nine-month performance in 2024 will generate profits of Rp 4.5 trillion, representing approximately 85% to 86% of consensus expectations.
"Therefore, we maintain an overweight rating on the metals sector. NCKL remains our top pick in the nickel category due to its strong operational performance and solid profit visibility," wrote Timothy and Christian in their recently published research.
NCKL’s operational strength is already reflected in its performance during the first half of 2024, with Harita Nickel producing 63,414 tons of nickel in FeNi, exceeding its production capacity. Similarly, the production of Mixed Hydroxide Precipitate (MHP) nickel reached 38,334 tons, a 28% increase compared to the same period last year.
Nevertheless, Timothy and Christian caution market participants about the potential for a temporary correction in NPI prices toward the end of the year, as restocking demand for NPI has decreased.
"We estimate that the NPI benchmark price will remain within the range of USD 11,500 to USD 12,000 per ton," the analysts noted.
Commenting on NCKL’s projected performance, Harita Nickel’s Director of Health, Safety, and Environment (HSE), Tonny H. Gultom, stated that the company’s performance is progressing smoothly and on track, aligned with its previously set targets.
This year, the company, listed under the NCKL ticker symbol, aims to produce 120,000 tons of nickel per year in MHP and 120,000 tons of nickel per year in FeNi. "We hope that everything continues to run smoothly until the end of the year," Tonny briefly told Investor Daily on Tuesday (October 15, 2024).
TINS is equally noteworthy, with Timothy and Christian projecting it as another promising metal issuer due to increased production. "We anticipate TINS' profitability will rise, driven by operational cost efficiency from the Top Submerge Lance (TSL) Ausmelt smelter technology," the two analysts explained.
Additionally, they forecast a 5 kiloton, or 5%, quarter-on-quarter increase in TINS' sales volume, which should start reflecting in the third quarter of 2024. "We favor TINS, as tin ore exports from Myanmar to China are decreasing, causing global supply constraints," they added.
It is important to note that China is one of the largest export markets for metals globally, with its industrial and manufacturing activities surging. The country has even introduced a stimulus package aimed at boosting economic growth, addressing the slowdown, and maintaining stability.
According to the Executive Director of the Center for Energy and Mining Law Studies, Bisman Bakhtiar, the stimulus package reflects the Chinese government’s serious efforts to bolster its economy and industrial performance.
“As a result, this will positively impact the demand for several Indonesian mining commodities that have been supplying China,” Bisman told Investor Daily on Tuesday (October 15, 2024).
In other parts, Harita Nickel is targeting a 300 megawatt-peak (MWp) Rooftop Solar Power Plant (PLTS) megaproject worth IDR 6.84 trillion to be completed next year. The project is touted as NCKL's biggest initiative in supporting Indonesia's clean energy transition.
“This rooftop solar project is part of our efforts to reduce carbon emissions, in line with Indonesia's target to achieve Net Zero Emission (NZE) by 2060,” NCKL Head of Investor Relations Lukito Kurniawan Gozali explained.
Lukito explained that NCKL is working on the project in two stages. The first involves the construction of a rooftop solar power plant with a capacity of 40 MWp, which is targeted to be completed by the end of 2024. Meanwhile, the second phase of construction will expand the capacity to 260 MWp by 2025.
This project also marks NCKL's significant shift from using conventional energy to renewable energy in the company's operations. Because, until now, Harita Nickel still relies on coal-fired power plants (PLTU) to support operational activities in the mining and downstream sectors.
