21 June 2023
JAKARTA, Investor.id – Four top-tier securities firms have initiated stock research on PT Trimegah Bangun Persada Tbk (NCKL) or Harita Nickel. They are Mandiri Sekuritas (Mansek), CGS-CIMB Sekuritas, Sucor Sekuritas, and BRI Danareksa Sekuritas.
Those brokers have given a positive recommendation for NCKL stock, either as a "buy" or "add," with varying target prices. The reason is that Harita Nickel has a promising outlook as it is an integrated nickel player, engaged in mining, ferronickel production, and the production of high-grade nickel, specifically nickel sulfate.
Mansek favors Harita Nickel because it has strong production growth, low operating costs, and exposure to high-pressure leach acid (HPAL) facilities that produce mixed hydroxide precipitate (MHP), which is a high-grade nickel product. The company will also produce nickel sulfate, a refined MHP product, which serves as a precursor for electric vehicle battery cathodes.
Mansek noted that Harita Nickel's ferronickel production is predicted to reach 120,000 tons in 2024, up from 95,000 tons in 2022, with the operation of the new capacity of PT Halmahera Jaya Feronikel (HJF). Furthermore, Harita Nickel's associate company, PT Karunia Permai Sentosa (KPS), is currently constructing a ferronickel plant with a capacity of 185,000 tons per year. As a result, Harita Nickel will have an exposure to ferronickel of 305,000 tons by 2025.
Meanwhile, Harita Nickel, through PT Halmahera Persada Lygend (HPL), currently has an HPAL facility with a capacity of 55,000 tons per year from stages I and II. Furthermore, Harita Nickel's associate company, PT Obi Nickel Cobalt (ONC), will be constructing HPAL stage III with a capacity of 65,000 tons per year. By 2024, Harita Nickel will have an exposure to MHP of 120,000 tons per year.
Accordingly, Mansek predicts Harita Nickel's revenue will achieve a compound annual growth rate (CAGR) of 49% during 2022-2025, which will be supported by the expansion of ferronickel production lines and an increased contribution from nickel mining. The company's net profit is projected to jump to Rp 8.7 trillion in 2025, compared to Rp 8.7 trillion last year.
Mansek recommends buying NCKL shares with a target price of IDR 1,450, based on a 2023 and 2024 PER of 15.6 times and 11 times, a discount from PT Vale Indonesia Tbk (INCO) shares which have a 2023 and 2024 PER of 16.5 times and 17.2 times, but are equivalent to PT Aneka Tambang Tbk (ANTM), which is 10.7 times and 10.8 times.
BRI Danareksa Sekuritas also recommends buying NCKL shares with a target price of Rp 1,400, offering a potential gain of 40.7%. This broker assumes that the long-term nickel price will reach US$19,000 per ton.
"We believe that PT Obi Stainless Steel (OSS) and other downstream products can boost NCKL shares to the valuation we have set," wrote BRI Danareksa, quoted on Tuesday (June 20, 2023).
Meanwhile, Sucor Sekuritas noted that Harita Nickel has spent Rp 24 trillion in capital expenditure (capex) to build a rotary kiln electric furnace (RKEF) smelter for ferronickel production, HPAL, and mining development during 2020-2022.
This broker sets a buy recommendation for NCKL shares with a target price of Rp 1,250 within the next 12 months, with a PER (Price-to-Earnings Ratio) of 12.4 times, which is lower than competitors 14 times. Sucor likes NCKL because it generates significant free cash flow, has strong business growth driven by downstream projects, efficient cost structure, and potential for a ferronickel price recovery.
CGS-CIMB recommends adding NCKL shares with a target price of Rp 1,200. The strong catalysts for this stock are the recovery of nickel pig iron and nickel sulfate/MHP prices.
*Source: Investor Daily
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