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VALE INDONESIA (INCO) – JAKARTA. PT Vale Indonesia Tbk (INCO) successfully recorded financial performance growth throughout 2023.
From the bottomline perspective, the net profit of this nickel issuer increased by 36.89% to US$ 274.33 million throughout 2023. As a comparison, INCO's net profit in 2022 was only US$ 200.40 million.
This increase in net profit is in line with the increase in revenue. INCO earned net revenue of US$ 1.23 billion by the end of 2023. This realization increased by 4.5% from the revenue in the 2022 period of US$ 1.17 billion.
Axell Ebenhaezer, an analyst at NH Korindo Securities Indonesia, believes there are two main catalysts for INCO's profit increase.
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First, INCO's success in reducing cash cost per ton, where the cash cost last year decreased by 12% year-on-year (YoY).
Second, the increase in nickel matte production
“Both catalysts successfully eliminated the negative impact of the normalization of global nickel matte prices,” said Axell, Monday (12/2).
For illustration, INCO produced 70,728 metric tons of nickel in matte in 2023. This realization increased by 18% from the 2022 production of only 60,090 tons of nickel matte.
The production in the fourth quarter of 2023 reached 19,084 tons of nickel in matte. This amount is 6% higher compared to the production volume recorded in the third quarter of 2023, which was 17,953 tons of nickel matte. This realization also increased by 18% year-on-year (yoy), where the production in the fourth quarter of 2022 only reached 16,183 tons.
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Rizkia Darmawan, an analyst at Mirae Asset Securities Indonesia, maintains the target price of INCO shares at IDR 4,900 per share. This target implies a price to earnings (P/E) ratio of 11.7 times in 2024.
However, Rizkia upgraded the recommendation for INCO shares to buy considering the dynamics of INCO's share price, which has corrected since the beginning of the year or year-to-date (ytd).
According to Axell, fundamentally, the 48% drop in nickel prices throughout 2023 has been reflected (priced in) in the drop in INCO's share price, which plummeted up to 52%.
“This means, the stabilization of nickel prices and the completion of the divestment process can be a catalyst for INCO to rebound,” Axell concluded.
