Trimegah Bangun Persada (NCKL IJ)

Commissioning Underway, Earnings Growth Supported by Higher JV Ownership

 

  • NCKL aims to focus on cost efficiency and commissioning in FY26, with KPS Phase 1&2 commissioning lifting nameplate capacity to ~305kt Ni.
  • Earnings quality structurally improves from FY26F, driven by higher effective JV ownership with ONC’s 40% stake fully reflected.
  • Resume coverage with Buy rating and higher TP of Rp1,800, supported by stronger earnings visibility and a more sustainable operating profile

 

FY26F: The commissioning phase

Our discussion with NCKL’s mgmt. reveals the company’s planned focus in FY26 onwards on a group-wide cost efficiency initiative, alongside the commissioning of several projects scheduled to come on stream in FY26F. These projects include KPS Phase2, KPS Phase3, CKM (Quicklime Plant), while iron extraction remains an incremental optional upside. As a result, total nameplate capacity is expected to increase materially to ~305kt in FY26F (vs ~180kt in 25F). That said, utilization is projected to normalize to a more sustainable ~68-70% in FY26F (from an elevated ~97% in FY25F) reflecting a transition toward more sustainable operating levels.

 

Earnings quality upgrade supported by higher JV ownership

Despite entering a utilization normalization phase, we expect NCKL’s FY26F earnings profile to remain resilient. Consolidated we project NPI nickel sales to be sustained at ~205-210kt Ni (vs. ~175 Ni in FY25F), supported by incremental contributions from newly commissioned capacity and a more stable operating mix. On the HPAL side, MHP output from ONC is expected to remain steady at 68.3kt, with its earnings contribution increasingly reflected through a higher effective ownership of 40% (vs ~5% previously). From a cost perspective, improving operational stability across RKEF operations, the full year earnings contribution from ONC, and the commencement of CKM are expected to lower consolidated cash costs per ton (NPI and MHP) by ~3-4% y-y (see Exh. 7), partly offset by initial project-related expenses and maintenance normalization.

 

Reiterate Buy rating with a higher TP of Rp1,800

Overall, we raise our FY26-27F net profit forecasts by +43.7-67.3% (see Exh. 7) to reflect newly commissioned capacity (+125.5kt) and higher effective ownership in key JVs. In line with our revised earnings assumptions, we raised our TP to Rp1,800 based on SOTP valuation which employed DCF for each project. Our TP implied FY26F PE of 9.9x (+1.0 std dev 3-year mean), which we view as reasonable given improving earnings visibility and a more sustainable operating profile. Key risks to our call include nickel price reversal, lower than expected utilization, and potential cost pressures from Global Minimum Tax (GMT) at JVs entities.

 

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