Stronger Price, Weaker Volume
1H21 Sales Volume Overview
· ANTM’s gold sales volume unexpectedly increased by +68.55% YoY to 428,923 tOz in 1H21 which exceed our expectations as volume dropped last year. On the other hand, ferronickel sales fell by -7.49% YoY to 12,068 mt in 1H21, below our estimate (only reaching 46.42%) while the sales are wholly exported. But we believe the increase on nickel ASP and gold sales volume will be able to boost their FY21E performance by +6%/+137% YoY in top and bottom line respectively as they managed to book a staggering increase on FY21E net income despite the drop on the revenue.
· INCO’s nickel matte sales tumbled by -16.14% YoY to 30,692 mt in 1H21 which is quite below our estimate and the management’s target (40%/48%). INCO's 1H21 result is also below our top line/bottom line estimate which only reached 48.22%/42.80%. We believe this is due to the increase in cost as well as lower production volume.
· MDKA’s gold sales volume dropped by -49.62% YoY to 27,774 tOz in 1H21 which is below our estimate and management target production of 100,000 tOz to 120,000 tOz in FY21E due to the mine incident earlier this year. However, copper sales increase significantly by +306.38% YoY to 3,312 mt though it is still well below our estimate and the management’s target production of 14,000 mt to 17,000 mt in FY21E. Nevertheless, we see that the rise on copper’s contribution to revenue will help to adjust the fall on gold considering the +91% YoY hike on 1H21 copper ASP.
Maintaining OVERWEIGHT Recommendation with ANTM IJ as our top pick
We maintain our OVERWEIGHT outlook for the metal mining sector and give BUY recommendation with revised target price for ANTM at TP: IDR3,100; from IDR2,550 previously with a +23% potential upside. ANTM is currently traded at Mean Level with 16.71x EV/EBITDA. We choose ANTM because it has outperformed our 1Q21 estimate by 27%, while we see that MDKA is still struggling due to the mine incident, followed by INCO. So, the risk to our call is lower production volume in FY21E, but we do hope that the increase on ASP will be able to offset it
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