23 October 2023
JAKARTA, investor.id - PT Trimegah Bangun Persada Tbk (NCKL), or Harita Nickel, plans to build a port and eight piers this year. The development of this mega project is part of the company's strategic plan for 2023.
PT Trimegah Bangun Persada Tbk President Director Roy Arman Arfandy said the construction of various projects and facilities by Harita Nickel on Obi Island, North Maluku, is still ongoing.
"This includes the company's need for port and pier infrastructure, which will continue in the future," Roy told Investor Daily recently.
Roy revealed that the construction of port and pier facilities will absorb funds from NCKL's planned capital expenditure (capex) for this year. Roy declined to disclose the exact amount the company has allocated for the construction of these infrastructures.
"We don't do specific calculations (for the port and pier)," Roy added.
However, the company hopes that these port and pier infrastructures can improve operational efficiency and support the company's growth and expansion. "The funding for the construction of this port will come from the company's internal cash reserves," said Roy.
This year, Harita Nickel has allocated approximately Rp900 billion to Rp1 trillion in capital expenditure, which will be used to complete several projects currently underway by 2023.
An analyst from Danareksa BRI Danareksa Sekuritas, Hasan Barakwan, in a recently published research, expects nickel prices and production margins to remain stable in the second half of 2023. The key lies in the volume factor.
"So, we see that the performance of the metal mining sector in the second half of 2023 will be driven by the volume factor, so we prefer producers with growing volume, one of which is NCKL," Hasan explained in his research.
The expectation of stabilizing nickel prices and production margins is reflected in the price of Chinese nickel pig iron (NPI) as a proxy. Hasan noted that the nickel price reached its lowest point at $13,182/ton in July 2023, continuing its decline since the second quarter of 2023 due to excessive supply from Indonesia.
"We estimate that the price of nickel for class I (MHP, NiSO4, matte) and its second class will remain stable in the third quarter of 2023 until the fourth quarter of 2023 amid expectations of increased demand for stainless steel and battery precursors. As for costs, we expect cash costs to remain flat QoQ as the ICI coal price remains relatively stable," explained Hasan.
This is supported by the stability of nickel prices and production margins. As such, we believe that the performance of the metals mining sector in the second half of 2023 will be largely driven by volumes, which will benefit nickel producers with higher volumes.
In fact, the completion of Harita Nickel's business unit smelter, PT Halmahera Jaya Feronikel (HJF), which uses rotary kiln electric furnace (RKEF) technology, has resulted in a 122% QoQ production growth for HJF in the second quarter of 2023, reaching 16,323 tons.
By the end of 2022, HJF officially launched two production lines, followed by three production lines, which will be completed in January 2023, February 2023 and March 2023, respectively.
"We estimate that HJF will reach full production capacity in the third quarter of 2023, and management targets production of appr,oximately 65,000 tons in 2023. With HJF's cumulative production reaching 23,676 tons in the first half of 2023, we estimate that HJF can produce 41,324 tons in the second half of 2023, resulting in total ferronickel production of up to 90,000 tons, or a 260% year-on-year increase," Hasan revealed.
"Therefore, we recommend buying NCKL shares with a target price of Rp 1,400 per share," he said. As of Friday's trading (10/20/2023), NCKL's share price closed at Rp 995. This price increased by 1.53% or equivalent to 15 points compared to the previous closing price of Rp 980 per share.