Rising global nickel commodity price is expected to increase the average sale price of nickel production of Vale Indonesia Tbk (INCO) by 13.3% to US$ 7.700 per ton in the third quarter of 2016. The company also recorded a sales volume increase in line with the rise in production to 80.000 tons by the end of 2016.
Daewoo Securities Indonesia, said global nickel supply deficit this year is estimated around 100,000 tonnes due to the closure of 10 nickel mines in the Philippines. The price of nickel in the London Metal Exchange (LME) is currently around US$ 10.125 per ton, up about 17% ytd.
Daewoo estimates INCO nickel production will reach 21.872 tons in the third quarter of 2016, higher by 13% compared to the second quarter of 2016. Sales of INCO in the second quarter soared 27% from US$ 108,7 million in the first quarter to US$ 138,1 million in the second quarter. Its net loss also slumped from US$ 15,42 million to US$ 4,6 million.
“INCO may potentially record a positive financial performance in the third quarter 2016,” said Daewoo. On Tuesday (11/10), INCO rose 2.25% to IDR 2.730.
BNI Securities recommended BUY for INCO with a target price of IDR 3.050. Bahana Securities also recommend BUY with a target price of IDR 3.000. (*)
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