Metal Mining

4Q24 preview: A Softer Quarter on Easing Commodity Prices

 

  • We estimate a slightly weaker 4Q24 earnings trend from declining ASPs, though some companies excel through soaring sales volume.
  • We expect ANTM and NCKL to beat consensus’ FY24 estimate at 132%/ 111% from increased sales volume.
  • We maintain our Neutral rating with a revised pecking order of ANTM> NCKL> INCO> TINS> MBMA> MDKA

 

4Q24 preview: A slightly weaker quarter, with a few exceptions

Throughout 4Q24, nickel products and their derivatives saw a slight decline in prices ranging from -0.2% to -4.9% qoq. Aside from a seasonally weaker restocking period, we believe this was partly caused by the relaxation of Indonesia’s mining license permit rules, which were mostly approved in 3Q24, resulting in an increased production run-rate in 4Q24. Thus, we expect a stronger sales volume in 4Q24, which leads to our sector avg. revenue growth estimate of +6% qoq, supported by ANTM by +c.19% qoq and INCO by +5% qoq. Meanwhile, we expect MDKA, MBMA, and NCKL to post flattish qoq production growth, and we expect TINS to post a -c.20% qoq revenue decline due to weaker sales volume.

 

4Q24 earnings potential outperformers: ANTM, NCKL

Based on 4Q24 operational data that has been released, we favor ANTM and NCKL as the outperformers for 4Q24 and FY24 results, as we see their FY24 net profit reaching 132%/111% of consensus’s estimates. Meanwhile, TINS might see a weaker 4Q24 due to slower sales volume and a lower LME tin price avg. of US$29k/ton, -8.5% qoq.

 

Better prospects in FY25

We expect stronger earnings growth in FY25F from improved sales volume after regulatory issues slowed down FY24’s performance. Furthermore, nickel miners continue to ramp up ore production, which supports margins and boosts earnings, particularly for ANTM, INCO, and MBMA. Thus, we expect the sector to record a revenue/net profit growth of -4%/+44% vs. consensus at +8%/+41%. The main discrepancy in revenue growth lies in ANTM’s gold sales assumption, though earnings growth estimate is relatively similar.

 

Maintain Neutral on the sector with top pick of ANTM/NCKL

We maintain a Neutral rating on the sector with the following pecking order: ANTM > NCKL > INCO > TINS > MBMA > MDKA. NCKL remains our top pick due to its strong operational performance and robust earnings visibility. We have upgraded ANTM in our pecking order due to the sustained ore premium in the market, elevating ore ASP for its own mining operations as well as from WBN. On the other hand, we have temporarily downgraded TINS in the list due to weak performance at the start of the year after poor weather slowed down production and an export license delay that halted domestic sales in Jan-Feb25. Furthermore, we are cautious about the indication of a resumption in Wa state mining, though it might take several months or years before the actual commencement.

 

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