{"id":319931,"date":"2023-01-02T12:10:00","date_gmt":"2023-01-02T04:10:00","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=319931"},"modified":"2023-01-02T22:15:45","modified_gmt":"2023-01-02T14:15:45","slug":"stock-in-focus-nickel-asia-corp-nikl-2-jan-2023-by-regina-capital-development-corp","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-nickel-asia-corp-nikl-2-jan-2023-by-regina-capital-development-corp\/","title":{"rendered":"Stock in Focus: Nickel Asia Corp. (NIKL) – 2 Jan 2023 by Regina Capital Development Corp."},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>NIKL<\/td><\/tr>
Company Name<\/strong><\/td>Nickel Asia Corp.<\/td><\/tr>
Broker<\/strong><\/td>Regina Capital Development Corp.<\/td><\/tr>
Opinion Issued on<\/strong><\/td>2 Jan 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 7.30<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Our roll-forward forecast model yielded a higher fair value Target Price of P7.30\/share, which reinforces our BUY recommendation<\/strong>. Prevailing share prices continue to provide large upside potential relative to our estimated target price.<\/p>\n\n\n\n

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Analysis and Opinion<\/h2>\n\n\n\n

NIKL is a long-term bet<\/strong><\/p>\n\n\n\n

Industry experts continue to think that the global nickel market will remain in surplus next year. Near-term areas of interest for the global nickel market are: 1) slowing stainless steel demand most attributable to China\u2019s downbeat construction sector, 2) Indonesia\u2019s surging production of nickel, and 3) uncertainty regarding Russian metal supply. <\/p>\n\n\n\n

All else constant, items 1 and 2 point to nickel prices remaining under pressure in 2023, but still slightly elevated versus pre-pandemic levels. We conducted a regression analysis of Nickel Asia Corporation\u2019s (NIKL) stock prices against LME Nickel Futures prices. Ceteris paribus, NIKL\u2019s stock price should be trading at around P7.60\/sh if global nickel prices continue to hover near $30k \u2014 based on our regression model.<\/p>\n\n\n\n

Despite the lower ore sales sold in 9M 2022, NIKL\u2019s attributable net income still grew by +12% y\/y to P6.90 billion on the back of higher nickel ore prices and a stronger dollar. <\/p>\n\n\n\n

Bearish near-term outlook<\/strong><\/p>\n\n\n\n

We maintain our view that the near-term outlook for nickel is slightly bearish — although our weak initial 6-month short-term projection has been extended due to the unprecedented Russia-Ukraine war at the start of the year which catalyzed several volatile swings in global commodities prices, building supply surplus, and weaker demand for some metals on recession fears.<\/p>\n\n\n\n

While metals prices performed strongly in 1Q 2022, a strong USD, rising rates, and weaker downstream demand led to a correction for the remainder of the year. Nickel prices, however, managed to hold onto YTD gains after the much-talked-about short squeeze in March of 2022.<\/p>\n\n\n\n

Outlook<\/strong><\/p>\n\n\n\n

We haven\u2019t made any big changes to our outlook. The impact of the volatile prices in the 1st half (1H) 2022 mostly normalized during the remainder of the year. We continue to see just steady ore sales \u2014 maximum of high single-digit growth at least until 2024E. The lower demand for stainless steel in the next coming years continue to dictate market supply performance and is therefore projected to cause a surplus, while the rising demand for EV batteries is still far into the long-term\u2014not enough to plug the whole left by the former.<\/p>\n\n\n\n

We think NIKL\u2019s lower actual ore sales will likely be mitigated by higher ASPs relative to pre-pandemic levels in 2023E, but even the rising global nickel prices are expected to wind down by 2H23. Net effect would be slightly narrower margin contractions, but ultimately bottomline could decline by the low-single digits or stay flat. Note that this year would be considered a high base.<\/p>\n\n\n\n

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Check how many brokers recommend this stock<\/h2>\n\n\n\n
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