Trimegah Bangun Persada (NCKL.IJ Rp 665; BUY TP Rp 1,500) In line FY24 Earnings, Upgrading Our FY25 Estimate

Stock Code	Last Price	Change	Change %
MKPI	25,275	1,025	4.23%
DSSA	43,800	1,000	2.34%
MLPT	36,200	875	2.48%
TCPI	5,500	375	7.32%
AMMN	6,425	350	5.76%
ICBP	10,600	350	3.41%
JSMR	4,290	240	5.93%
MDKA	1,645	230	16.25%

Trimegah Bangun Persada (NCKL IJ)

In line FY24 Earnings, Upgrading Our FY25 Estimate

NCKL recorded a weaker 4Q24 NP of Rp1.5tr, -24% qoq, due to a weaker FeNi sales volume and contribution from JV as ASP were trending down.
We slightly revise our FY25-27 earnings estimate by +8.4%/+4.5%/ +4.4% on the back of solid cash cost management, which lifted margins.
Reiterate our Buy rating with an unchanged TP of Rp1,500. Key risks to our call include lower nickel prices and a lower utilization rate.

A satisfactory FY24 performance despite 4Q24 earnings drop

NCKL recorded a net profit of Rp1.5tr, -24% qoq, while FY24 net profit grew to Rp6.4tr, +14% yoy, reaching 100%/106% of ours/cons’ estimates. Meanwhile, 4Q24 revenue dropped to Rp6.6tr, -13% qoq, due to a decline in FeNi sales by -12% qoq. Furthermore, there was a Rp215bn community development expense incurred in 4Q, which brought a spike in opex to Rp553bn, +74% qoq, which was for the handover of the new Kawasi village for local residents who were affected by the construction of smelters in Obi Island. Separately, the profits from JV declined to Rp404bn, -40% qoq, which was attributable to a decline in quarterly nickel sulfate and EC cash margin of -30%/-29%, respectively.

Project updates and outlook

Mgmt provided updates on several projects, which included KPS phase 1 completion in early 2025 with targeted FY25 production of 50-60kt in NPI. Phase 2 and 3 are currently in early construction with COD by FY26. On the upstream side, GTS mine is preparing for production in 2H25. With an R&R of 41mn tonnes, we expect its annual production to be limited to reduce 3rd-party ore purchases. On the downstream side, NCKL is constructing a 600ktpa quicklime plant, also known as calcium oxide, that will feed its HPAL, aimed at further reducing its cash cost. As for HPAL investments, HPL has paid out dividends of US$200mn in FY24, where NCKL’s portion amounts to Rp1.4tr. Moving forward, it is likely that HPL will pay out regular dividends, though other smelters are still too early to tell. Nonetheless, NCKL is still aiming for an additional stake in ONC, though the timeline of its purchase is still under discussion.

Slight upwards revision on earnings estimate

We slightly revise our FY25-27 earnings estimate by +8.4%/+4.5%/+4.4%, as we lower our cash cost assumption driven by cost efficiencies seen throughout all its production in FY24. Note that FeNi/MHP/NiSo/CoSo cash cost decreased -15.5%/-16.5%/-8.1%/-13.2% in FY24, which increase our FY25/26 estimate for profits of associates to Rp3.6tr/Rp3.8tr (from: Rp3.2tr/Rp3.3tr).

Reiterate our Buy rating with an unchanged TP of Rp1,500

We reiterate our Buy rating in view of robust earnings growth of +53% yoy, derived from ONC and KPS’ initial FY production, paired with their solid cash cost and growing ore sales. We maintain our TP at Rp1,500 based on our SOTP valuation method and DCF on each project. Our TP implies an FY25F PE of 9.7x vs. 4.3x at the current price of Rp670. Key risks to our call include lower nickel prices, a lower utilization rate, and project execution delays.

… Read More 20250327 NCKL