Aneka Tambang (ANTM IJ) - Completion of project divestments set the stage for more future downstream projects

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Aneka Tambang (ANTM IJ)

Completion of project divestments set the stage for more future downstream projects

ANTM divested SDA with proceeds of US$416mn and contingent rights to receive further payments within 36 months.
It also completed the divestment of Feni Haltim (FHT), with potential one-off gain of Rp599bn in 4Q23.
We maintain our Buy rating and TP of Rp1,960 for now, based on the valuation the existing projects.

ANTM completed divestment of subsidiary (SDA)…

ANTM just completed a series of transactions (i.e. the divestment of Sumberdaya Arindo/ SDA and Feni Haltim/ FHT) on 28 Dec 2023. HongKong CBL Limited (HKCBL) will acquire 49% of ANTM’s ownership in SDA, in a transaction valued at US$416.5mn, which will be settled on a cash basis. ANTM also has contingent rights to receive payments if there are additional reserves in the SDA mining area within a period of 36 months from the date of the completion of the transaction.

…and FHT to HKCBL, with potential one-off gains in 4Q23

Another transaction is the divestment of FHT to HKCBL, with the latter purchasing 10% of ANTM’s shares in FHT and the entire 50% shareholding in FHT held by International Mineral Capital (IMC), ANTM’s wholly-owned subsidiary. The transaction amounts to Rp781.2 bn, with Rp130.2 bn for the 10% ownership of ANTM’s direct shareholding in FHT and Rp651 bn for the 50% ownership of IMC’s shares in FHT. The management also mentioned that the company would record one-off gains of Rp599bn in 4Q23.

HPAL and other downstream projects in the pipeline

ANTM and HKCBL also plan to build an HPAL with respective shareholdings of 30% and 70%. For the EV Battery Project, there are sub-projects which ANTM does not have a direct ownership, but instead have an exposure through Industri Baterai Indonesia (IBC), which ANTM holds a 25% stake. These sub-projects relate to the Battery Materials, Battery Cells, and Battery Recycling. Based on management’s guidance, ANTM will also need to participate in funding these projects to maintain its ownership in IBC. We believe ANTM will utilize the divestment proceeds (totaling to around Rp7tr) to finance the down streaming projects.

Maintain Buy with a TP of Rp1,960

We have not yet factored in the above projects into our valuation as details are still limited, and thus maintain our DCF-based TP of Rp1,960. Nonetheless, we see the divestment to be positive, as it enables ANTM to tap further into battery value chain projects. Risks to our view include further declines in nickel prices which would make the projects unfeasible.

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