Aneka Tambang: Set for a Strong Year Ahead

Broker: PT Maybank Sekuritas Indonesia

Date: November 11, 2024

Overview

This detailed analysis dives into the robust performance and future projections of Aneka Tambang (ANTM IJ), focusing on its key segments of nickel ore and gold. The report highlights the company’s strategic positioning, expected growth trajectories, and the factors driving its financial outlook.

Strong Performance in Nickel and Gold Segments

Aneka Tambang (ANTM) is poised for a strong performance in the upcoming quarters and into FY25. The company’s growth is significantly driven by its nickel and gold segments. Key highlights include a 14.3% increase in the FY24E Average Selling Price (ASP) of nickel ore to USD 40/t and a 28.2% rise in gold sales to 1.1 million ounces. For FY25E, ANTM is projected to witness a 67% year-on-year (YoY) increase in nickel ore volume to 15 million tonnes with sustained premium pricing, augmenting earnings by 38% to IDR 3.8 trillion.

Q4 2024 Expectations

Entering the fourth quarter of 2024, ANTM is well-positioned to leverage strong fundamentals in its nickel ore and gold segments. Nickel ore sales are achieving premiums of up to USD 18/t above the Mineral Reference Price (HPM), driving revenue gains amid sustained demand. The gold segment continues its growth trajectory, bolstered by strong retail demand extending from Q3 2024 into October 2024. Consequently, the FY24E nickel ore ASP has been raised by 14.3% to USD 40/t, with gold sales volume forecast increased by 28.2% to 1.1 million ounces.

FY25 Earnings Projections

ANTM’s FY25 performance is expected to remain robust, fueled by the continued strength in its nickel ore segment. With nickel ore sales volume forecasted to reach 15 million tonnes, marking a 67% YoY growth amid rising demand, ANTM is well-positioned to capitalize on this upswing. Sustained premium pricing over benchmark levels is anticipated to further boost revenue potential. Consequently, the nickel ore ASP assumption has been raised by 10.2% to USD 40/t, and gold sales volume estimate by 6.2% to 1.1 million ounces for FY25E. These adjustments lead to an increase in the FY25 earnings forecast by 38% to IDR 3.8 trillion.

Price Target and Risks

The target price (TP) for ANTM has been raised to IDR 1,950 (from IDR 1,900), driven by higher earnings revisions reflecting robust growth in its nickel and gold segments. Notably, this TP does not yet factor in the upcoming smelter grade alumina project, expected to be completed in the second half of 2025, which is anticipated to provide further earnings upside next year. Key risks include the loss of nickel premium and lower gold sales volume.

Company Description

PT Aneka Tambang Tbk, a subsidiary of MIND ID, operates an integrated mining business with a diversified asset portfolio of nickel, gold, and bauxite.

Financial Metrics and Performance

ANTM’s financial performance showcases a significant growth trajectory. The company is forecasted to achieve a 15.2% Compound Annual Growth Rate (CAGR) in Net Profit After Tax (NPAT) over FY21-26E, driven by rising ore demand. Margins are expected to rise due to operational leverage from higher volumes and a decline in energy prices relative to nickel prices. ANTM also maintains a strong cash position and balance sheet, supporting its growth projects and dividend payouts.

Environmental, Social, and Governance (ESG) Initiatives

ANTM is committed to achieving net-zero emissions by 2060 through carbon offsetting programs and other greenhouse gas (GHG) emission reduction policies. The company has engaged in extensive reclamation programs, planting over 548,000 trees and restoring 1.2 million hectares of land in 2021. In terms of governance, ANTM’s Board of Directors and Board of Commissioners are structured to ensure effective management and oversight, with a focus on maintaining independence and accountability.

Operational Highlights

ANTM’s operational highlights include strong nickel ore and gold sales volumes. For 2024E, nickel ore volume is forecasted at 9 million tonnes, with a jump to 15 million tonnes in 2025E. Gold sales are expected to reach 1.1 million ounces in both 2024E and 2025E. Ferronickel production remains stable at 20,000 tonnes in 2024E and 22,000 tonnes in 2025E.

Key Financial Ratios and Metrics

Key financial ratios for ANTM include an EBITDA margin of 7.5% in 2024E and 8.6% in 2025E, with core net profit growth of 29.6% in 2024E and 24.2% in 2025E. The company’s P/E ratio is projected at 12.4x for 2024E and 10.0x for 2025E, indicating a favorable valuation relative to its earnings growth potential.

Risk Factors

Potential downside risks for ANTM include lower-than-expected global economic growth, which could impact nickel prices, and delays in the approval of the Work Plan and Budget (RKAB). Additionally, government-imposed royalties or increased export taxes on Indonesia’s class-2 products could affect profitability.

Conclusion

In conclusion, Aneka Tambang is set for a strong year ahead with significant growth potential driven by its nickel and gold segments. The company’s strategic positioning, robust financial metrics, and commitment to ESG initiatives make it a compelling investment opportunity. Investors should consider the potential upside from the upcoming smelter grade alumina project and monitor key risks associated with market dynamics and regulatory changes.