Earnings review ANTM

by Andy Wibowo Gunawan | Mirae Asset Sekuritas Indonesia

In 3Q18, ANTM’s nickel ore production reached 2.7mn wmt (+64.3% QoQ; +40.6% YoY) and outnumbered our estimate at 2.3mn wmt. This higher nickel ore production was due to fewer rainy days in Sulawesi (10.4 days; -43.4% QoQ). Meanwhile, ANTM’s 3Q18 gold production went down to 437kg (-13.1% QoQ; -4.8% YoY), or below our estimate at 510kg. For ferronickel, ANTM produced 6,453 TNi (-4.0% QoQ; -0.5% YoY).

Given the higher 3Q18 nickel ore production, ANTM’s nickel ore sales volume jumped to 2.2mn wmt (+236.8% QoQ; +26.0% YoY), higher than our prediction at 909,300 wmt. For gold, ANTM’s 3Q18 gold sales volume increased to 8.6 tonnes (+26.6% QoQ; +135.3% YoY), also exceeding our estimate at 6.8 tonnes. Thus, ANTM’s 3Q18 revenue spiked up to IDR8.1tr (+33.7% QoQ; +105.9% YoY). Furthermore, ANTM’s 3Q18 bottom-line numbers look stronger than those of the previous quarter with net profit of IDR287bn (+190.2% QoQ; +74.1% YoY).

We maintain our full-year 2018 – 19F earnings estimates for ANTM as we remain optimistic given its strong growth both in nickel ore and gold sales volume. We also keep our full-year 2018 – 19F global nickel and gold price estimates the same. Thus, we maintain our full-year 2018 – 19F revenue projections at IDR24.5tr and IDR23.6tr, respectively, as well as our full-year 2018 – 19F net profit targets at IDR766bn and IDR904bn, respectively (+461.4% and +18.0% YoY, respectively).

As we leave our earnings estimates unchanged, we maintain our target price of IDR1,115 on ANTM. We reiterate our Buy call, given its 81.3% implied upside potential.

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