Aneka Tambang (ANTM IJ)
Positive update from the meeting with ANTM’s CFO
- ANTM is hopeful of further RKAB approval by July based on the release of PP no.25.
- Cost savings are sought at both FeNi plants (Pomalaa and P3FH) from switching energy sources that will lead to c.8-12% lower cash costs.
- Maintain Buy on ANTM with an unchanged TP of Rp2,000. Key risks include lower commodity prices, lower utilization, and project delays.
Potential tailwinds from possible RKAB approval
In our meeting, ANTM’s management is hopeful that RKAB approval could materialize by July for SDA and NKA mines due to the release of PP no.25 at the end of May24, which allows the concession holder to operate if it has at least 30% ownership in downstream activities. This should qualify SDA/NKA as the mines are majority owned by ANTM, and ANTM owns 40% of FHT and 30% of HPAL JVco. With possible RKAB approval in July, we estimate that ANTM could record 13-14wmt of sales in FY24 (vs. our base-case assumption of 12wmt).
EV battery projects are progressing
ANTM and CBL (CATL group) are currently working on debt financing for FHT’s RKEF smelter before it proceeds further with EPC work in 1Q25, construction by mid-2025 and expected operation by early FY27. Note that ANTM received proceeds of Rp7tn during the spin-off of SDA and FHT, which will be used for equity injection in FHT and HPAL JVco that is scheduled to start roughly one year after FHT. Moreover, the management expects a future tenant in FHT’s industrial park to develop CFPP to power FHT, HPAL JVco, as well as ANTM’s P3FH FeNi smelter.
Cost saving efforts to improve the economics of the FeNi projects
ANTM aims to reduce energy costs for both of its FeNi smelters by switching the power source to a cheaper alternative. Pomalaa FeNi will switch to PLN’s grid starting in October. This should result in a decline in its electricity costs by 40% to Rp990/kWh. Meanwhile, its P3FH smelter is planned to use Pomalaa’s diesel power before eventually shifting to the CFPP in the FHT industrial park, which would significantly reduce costs from c. Rp2k/kWh to c. Rp1.1k/kWh. Should power switching proceed smoothly, we shall see a notable reduction in the cash cost to c.US$11k/ton from US$12-12.5k/ton previously.
Reiterate our Buy rating with a TP of Rp2,000
We reiterate our Buy rating with an unchanged TP of Rp2,000 based on FY24F PE of 16.6x, equal to -0.5x std of its forward PE band. Key risks to our call include lower nickel prices, a lower utilization rate, and project execution delays.
… Read More 20240607 ANTM
