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Danareksa Equity Snapshot - ANTM 12 Maret 2018
March 12, 2018 14:08

Aneka Tambang(ANTM IJ)

Recovery in net profits

Aneka Tambang (ANTM) reported net profits of IDR468bn in 4Q17 (+184.2% qoq). On a yearly basis, the net profits jumped by 110.6% yoy to IDR137bn. The net profits figure is above the consensus and our estimate mainly thanks to better-than-expected sales volume of ferronickel and gold. We maintain our HOLD recommendation while reviewing our previous target price of IDR700 (based on DCF valuation).

4Q17 net profits up significantly.  The company reported strong quarterly net profits of IDR468bn in 4Q17 (3Q17: IDR165bn). This mainly owed to: a) higher ferronickel sales volume (+79.0% qoq) and strong LME nickel prices (+9.4% qoq), b) 70.0% qoq higher gold sales volume and c) other income in 4Q17 vs. other expenses in 3Q17.

2017: Boosted by strong nickel ore and gold sales volume.  The company reported 110.6% yoy higher net profits of IDR137bn in 2017. This increase was mainly driven by: a) strong nickel ore sales volume following the relaxation of nickel ore exports (with Ni < 1.7%) in the beginning of 2017 and b) higher gold sales volume (+29.1% yoy).

Higher production target for 2018. ANTM targets 19% yoy higher ferronickel production of 26,000 tonnes in 2018.  By boosting production, ANTM seeks to gradually increase the utilization of its ferronickel plant capacity in order to raise production to meet its production capacity of 27,000 tonnes. At the same time, ANTM also expects to double its nickel ore production to 11.3mn Wmt in 2018 (2017: 5.6mn Wmt). For gold production, the company targets 11% yoy higher sales volume of 2,201 kg from the Pobngkor and Cibaliung mines.

Maintain HOLD.  ANTM targets better earnings in 2018 supported by higher nickel ore and ferronickel sales volume and better nickel prices albeit increasing at a slower rate. We maintain our HOLD recommendation on the stock while reviewing our previous target price of IDR700 (based on DCF valuation with WACC of 9.6% and long-term growth of 3%).

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