{"id":323679,"date":"2023-06-15T00:02:00","date_gmt":"2023-06-14T16:02:00","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=323679"},"modified":"2023-06-14T23:24:05","modified_gmt":"2023-06-14T15:24:05","slug":"stock-in-focus-dmci-holdings-inc-dmc-15-june-2023-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-dmci-holdings-inc-dmc-15-june-2023-by-ap-securities\/","title":{"rendered":"Stock in Focus: DMCI Holdings Inc. (DMC) – 15 June 2023 by AP Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>DMC<\/td><\/tr>
Company Name<\/strong><\/td>DMCI Holdings Inc.<\/td><\/tr>
Broker<\/strong><\/td>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>15 June 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 11.22<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We maintain our BUY rating on DMC with a consensus Target Price of P11.22\/share<\/strong>.<\/p>\n\n\n\n

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

DMC\u2019s Zambales nickel mine to boost production<\/strong><\/p>\n\n\n\n

Zambales Diversified Metals Corp. (ZDMC), a unit of DMCI Mining, is targeting to ship out 1.5-Million wet metric tons (WMT) of nickel ore this year. This is after the company was granted an environment compliance certificate (ECC) which allows it to extract up to 2.0-Mn WMT. To recall, ZDMC\u2019s production was restricted to only 1.0 Mn WMT and the company maxed out this limit in 2022. Given the higher limit on its extraction activities, ZDMC was able to produce 599,000 WMT of nickel ore in Q1 2023 and is targeting to produce between 1.7 to 2.0-Mn WMT this year.<\/p>\n\n\n\n

Filling the production gap left by Berong closure<\/strong><\/p>\n\n\n\n

DMC\u2019s other nickel mine, Berong Nickel in Palawan, reached the end of its life in 2021 and shipped out the last of its stockpiles in 2022. Ramped up production in Zambales is seen to partially offset the decommissioning of Berong, and should deliver better returns given that ZDMC has higher ore grades and the cost of shipping is slightly lower with the relatively shorter distance to China from Zambales as compared to Palawan.<\/p>\n\n\n\n

DMCI Mining can increase contribution by 37.0%<\/strong><\/p>\n\n\n\n

DMCI Mining contributed P473.0-Mn to DMC\u2019s consolidated net income in Q1 2023, this is 5.0% lower than the previous year which still included the last shipments from Berong. Ramped up production in Zambales, higher average selling prices due to higher ore grades, along with effective cost management should allow DMCI Mining to meet or even surpass its FY 2023 bottom line contribution to its parent back when it still had two operating mines in 2021.<\/p>\n\n\n\n

Risk<\/strong><\/p>\n\n\n\n

However, we note that given the slowdown in manufacturing activity and rising nickel stockpiles in China, there is a possibility that DMCI Mining might have difficulty finding buyers for its additional production volumes. Nonetheless, higher contribution from nickel mining could help reduce the YoY decline in DMC\u2019s FY 2023 earnings to only 18.8% instead of the initially forecasted 20.3% decline from last year\u2019s high base. Along with better-than-expected results from SCC\u2019s power generation unit, there is an increased likelihood that DMC can beat expectations with its full-year figures.<\/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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All Stock Rankings<\/a><\/blockquote>