Bayon Financial

Graeme Cunningham

Independent Insight Provider

Bayon Financial provides industry and company analysis focusing on mid and small cap equity research coverage across a range of sectors including mining, financials and telecoms.

Equity Bottom-Up

<ul>
<li>Vale Indonesia's Q3/24 results came in below expectations with net income -8.1% below consensus, although there was a slight 0.4% beat for revenue </li>
<li>Revenue dropped -17.6% yoy, hit by a -20.1% decline in the nickel matte price as volume rose 3.1%, which offset a -0.6% decline in cost of revenue </li>
<li>We expect short-term pressure on the shares, with ROE and P/B near two decade lows, as nickel could remain weak and new projects could be a H2/25 driver </li>
</ul>


Vale Indonesia's Q3/24 results came in below expectations with net income -8.1% below consensus, although there was a slight 0.4% beat for revenue 
Revenue dropped -17.6% yoy, hit by a -20.1% decline in the nickel matte price as volume rose 3.1%, which offset a -0.6% decline in cost of revenue 
We expect short-term pressure on the shares, with ROE and P/B near two decade lows, as nickel could remain weak and new projects could be a H2/25 driver 


Vale Indonesia - Q3/24 Nickel Price Slide Offsets Cost Decline

<ul>
<li>Pure nickel play PT Vale Indonesia, a leading global producer, could transform significantly over the next few years with plans to take stakes in projects more than doubling current output</li>
<li>However, we see risks of a lull into 2025 as production is near capacity, the nickel price could potentially remain pressured from major global oversupply and operating costs could rise   </li>
<li>Given the weak consensus 2025E ROE of 5%, a 1.6x P/B is not particularly inexpensive, although for longer-term investors considering the expansion potential this could be an entry point  </li>
</ul>


Pure nickel play PT Vale Indonesia, a leading global producer, could transform significantly over the next few years with plans to take stakes in projects more than doubling current output
However, we see risks of a lull into 2025 as production is near capacity, the nickel price could potentially remain pressured from major global oversupply and operating costs could rise   
Given the weak consensus 2025E ROE of 5%, a 1.6x P/B is not particularly inexpensive, although for longer-term investors considering the expansion potential this could be an entry point  


Vale Indonesia: Potential Lull Before Big Transition For Pure Nickel Play

External broker reports(aggregated public sources), BRI Danareksa Research

BRI Danareksa Research

External broker reports(aggregated public sources)

As a one-stop financial solution with the vision to be the most valuable securities house, BRI Danareksa Sekuritas (BRIDS) has maintained an excellent track record and extensive experience in the capital market as an underwriter, broker, and financial advisor for individual, institutional, foreign and domestic, private and government clients. Established in 1992, PT Danareksa Sekuritas is a securities company that performs activities as a securities broker, underwriter, or arranger and financial advisor.

<ul><li>2Q24 net profit of US$31mn was still below estimate (39.5%/34.1% of our/ cons. FY24F), however the result was well anticipated.</li><li>INCO has the potential to sell up to 14Mt of saprolite and 42.5Mt of limonite once all mines are fully operational in FY25-26.</li><li>We maintain Buy rating with a SOTP-based TP of Rp5,700. Key risks to our call include lower nickel prices and a lower utilization rate.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

2Q24 net profit of US$31mn was still below estimate (39.5%/34.1% of our/ cons. FY24F), however the result was well anticipated.INCO has the potential to sell up to 14Mt of saprolite and 42.5Mt of limonite once all mines are fully operational in FY25-26.We maintain Buy rating with a SOTP-based TP of Rp5,700. Key risks to our call include lower nickel prices and a lower utilization rate.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Vale Indonesia -  2Q24 Strong Earnings as Expected, Albeit 1H24 Still Below Seasonal Achievements

Vale Indonesia - 2Q24 Strong Earnings as Expected, Albeit 1H24 Still Below Seasonal Achievements

<ul><li>1Q24 net profit miss (4.5/4.9% of our/ cons. FY24F) was caused by lower cash margin due to unexpectedly higher fuel costs and lower ASP</li><li>We cut FY24-25F net profit est. by -31.3%/-21.9% to account for lower matte output, ore grade, and a higher fuel consumption</li><li>We maintain Buy rating with a lower SOTP-based TP of Rp5,700. Key risks to our call include lower nickel prices and a lower utilization rate</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

1Q24 net profit miss (4.5/4.9% of our/ cons. FY24F) was caused by lower cash margin due to unexpectedly higher fuel costs and lower ASPWe cut FY24-25F net profit est. by -31.3%/-21.9% to account for lower matte output, ore grade, and a higher fuel consumptionWe maintain Buy rating with a lower SOTP-based TP of Rp5,700. Key risks to our call include lower nickel prices and a lower utilization rateContent is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Vale Indonesia - Lowering Our FY24-25F Post 1Q24 Earnings Miss

Indonesia

PT Vale Indonesia Tbk produces nickel in matte, an intermediate product, from lateritic ores at its integrated mining and processing facilities near Soroako, Sulawesi

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Vale Indonesia Tbk (INCO IJ)

Vale Indonesia - Q3/24 Nickel Price Slide Offsets Cost Decline

Vale Indonesia's Q3/24 came in below expectations, as a nickel decline drove down revenue, offsetting a cost improvement, with ROE and P/B for 2024...

Graeme Cunningham

Vale Indonesia: Potential Lull Before Big Transition For Pure Nickel Play

While pure nickel play PT Vale Indonesia could more than double its capacity over the next few years through new projects, it could face a short...

Graeme Cunningham

Vale Indonesia - 2Q24 Strong Earnings as Expected, Albeit 1H24 Still Below Seasonal Achievements

2Q24 net profit of US$31mn was still below estimate (39.5%/34.1% of our/ cons. FY24F), however the result was well anticipated.

BRI Danareksa Research

Vale Indonesia - 2Q24 Strong Earnings as Expected, Albeit 1H24 Still Below Seasonal Achievements

2Q24 net profit of US$31mn was still below estimate (39.5%/34.1% of our/ cons. FY24F), however the result was well anticipated.

BRI Danareksa Research

Vale Indonesia - Lowering Our FY24-25F Post 1Q24 Earnings Miss

We maintain Buy rating with a lower SOTP-based TP of Rp5,700. Key risks to our call include lower nickel prices and a lower utilization rate

BRI Danareksa Research

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