Vale Indonesia (INCO IJ)

On Track for Growth Acceleration

 

  • We expect INCO’s revenue and earnings growth to accelerate in 2H25 and FY26, supported by higher nickel matte payability & ore production.
  • HPAL projects remain on track for 4Q26 commissioning, with upside risk of an earlier timeline.
  • We raised FY25 EPS est. by +25% but slightly trimmed FY26-27; reiterate Buy rating with a higher SOTP-based TP of Rp4,700. 

 

Growth drivers aplenty for 2H25 and FY26

Following the approval of RKAB (of 2.2mn wmt of saprolite ore), INCO expects ore volume production from the Bahodopi block to be evenly split in 3Q-4Q25, at an estimated 1.0-1.2 mn wmt per quarter. Management further indicated that it has locked in premium pricing for the ore at $25/ton (vs. HPM prices) until Dec25, translating to potential revenue uplift of US$56mn in 2H25. In nickel matte segment, following the decision to accelerate maintenance into 1H25, INCO is set to deliver 35.6k tonnes in 2H25 (vs. 1H25: 35.6k tonnes, +2% yoy), including the schedule for electric furnace-3 rebuild in 4Q25. Furthermore, it confirmed that the agreement with buyers to increase nickel matte’s payability to 82%.

 

Key growth projects are on schedule

INCO reaffirmed its commissioning plan for the HPAL projects in 4Q26, but management sees the potential to accelerate the mechanical completion of the plant from 4Q26 to 3Q26. Meanwhile, Pomala’s mining operation is slated for 3Q26, with potential acceleration into 1Q-2Q26. The company spent US$226mn on capex in 1H25, with US$241mn budgeted for 2H25 and US$750mn and US$907mn in FY26 and FY27, respectively, to fund growth projects.

 

Forecast revisions

We raised our FY25 net profit forecast by 25% to account for higher payability and nickel ore premium but slightly trimmed our FY26 and FY27 estimates (by -6% and -1%, respectively) to reflect the company’s latest capex assumptions.

 

Reiterate Buy rating with higher TP of Rp4,700

We reiterate Buy rating on INCO on the back of attractive growth and projects, with a higher SOTP-based TP of Rp4,700, which reflects higher revenue and EBITDA forecasts from the nickel matte and ore businesses. Key risks are weaker nickel price, project delays, and RKAB delays.

 

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