Merdeka Copper Gold (MDKA IJ)
Anticipating Pani Gold to Boost Earnings, but Lowering Estimates on Weaker MBMA Outlook
- MDKA recorded strong earnings of US$11.3mn in 4Q24 that was supported by strong Gold ASP and lower Copper cash cost.
- Pani gold’s timeline is intact, with expected commissioning by late FY25.
- We revised our FY25-27F earnings by -43%/-10%/0%, maintaining our TP at Rp2,400; reiterate Buy rating on upsides from growth projects.
Despite a strong result, FY24 still posted a net loss
MDKA’s 4Q24 net profit reached US$11.3mn, though FY24 results were still at a net loss of -US$55.8mn. Meanwhile, 4Q24 revenue slightly declined to US$572mn, -0.4% qoq, while FY24 revenue managed to grow by +31% yoy to US$2.2bn, reaching 101%/100% of our/cons FY24 estimate. MDKA recorded a positive 4Q earnings result that was supported by widening cash margin for both copper and gold by +240%/+17% qoq, which was driven by Gold's growing ASP to US$2,672. Meanwhile, its copper margin grew as cash cost declined by -54% qoq to US$3,593/ton.
Positive updates from TB copper and Pani gold project
MDKA has extended the TB copper oxide gold mine up to FY30, which will be further elaborated in the upcoming PFS by the end of Apr25. With the extension of mine life, TB copper will obtain prolonged cash flow before moving into the SLC mine which requires a higher capex. On the other hand, the Pani gold project is progressing in line with mgmt.’ timeline, achieving 46% completion by 1Q25 and is set to commission in late FY25.
Maintain Buy rating with an unchanged TP of Rp2,400
We adjusted our FY25-27F earnings estimates by -43%/-10%/0% as we lower our assumptions for MBMA, while maintaining existing assumptions for its gold and copper operations. We maintain our Buy rating on valuation upsides from key growth projects. Key risks include higher cash cost, lower ASP, and project delays. We did not lower our TP as the decrease in MBMA’s EV in our SOTP is not significant enough to reduce MDKA’s TP.
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