{"id":326487,"date":"2024-01-25T13:17:04","date_gmt":"2024-01-25T05:17:04","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=326487"},"modified":"2024-01-25T14:00:11","modified_gmt":"2024-01-25T06:00:11","slug":"stock-in-focus-nickel-asia-corp-nikl-25-jan-2024-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-nickel-asia-corp-nikl-25-jan-2024-by-ap-securities\/","title":{"rendered":"Stock in Focus: Nickel Asia Corp. (NIKL) – 25 Jan 2024 by AP Securities"},"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>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>25 Jan 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Hold<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 6.71<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We maintain our HOLD rating on NIKL despite the potential upside to consensus Target Price of P6.71.<\/p>\n\n\n\n

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

Aussie miners in trouble <\/h3>\n\n\n\n

Panoramic Resources\u2019 Savannah mine in West Australia is set to halt operations a few weeks after calling in FTI Consulting to mitigate its cash flow problems. Panoramic reopened the mothballed Savannah mine in 2021, but was unable to maintain sustainable operations when nickel prices plunged in 2023. BHP\u2019s Nickel West and Andrew Forrest\u2019s Mincor nickel mines are also struggling to maintain operations after nickel prices were halved in 2023, and the situation was worsened by rising costs due to the global inflation wave. Both mines have cut jobs in the past several months, and yet still losing millions of dollars a month.<\/p>\n\n\n\n

A flood of nickel<\/h3>\n\n\n\n

Aussie nickel miners have put the blame squarely on China, who has been aggressively investing into Indonesian refiners to flood the market with nickel, which is central to its strategy to achieve global domination of the electric vehicle market. Indonesian mines have likewise ramped up production to capitalize on their position as the top nickel producer in the world and to secure their place in the EV supply chain.<\/p>\n\n\n\n

NIKL left out in the cold in a distorted market<\/h3>\n\n\n\n

BloombergNEF estimated early in December that the nickel market will remain in surplus until 2030, with an 80% annual growth in supply outstripping the 29% annual growth in demand. While NIKL is operating in a milder cost environment than its peers in Australia, its nickel refining operations have struggled to turn a
profit amidst the slump in nickel prices. For the nine months ending September 2023, NIKL\u2019s Taganito HPAL nickel processing facility reported a net income of P629.7-Million, a mere fraction of the P7,667.4-Million it made the previous year. The company\u2019s Coral Bay processing facility, on the other hand, reported a net loss of
P2,830.1-Million for the same period, a sharp turnaround from last year\u2019s net earnings of P2,569.2-Million. <\/p>\n\n\n\n

Market has begun pricing in the dim outlook<\/h3>\n\n\n\n

On a consolidated basis, NIKL\u2019s net income margin in Q3 remained a fairly robust 22.1%, but this may narrow further to the low teens given that further downside is seen in nickel prices over the coming years. As such, estimated EPS CAGR for the next three years is estimated to be at -10.9%, versus its average EPS growth of 36.2% over the past three years. The market seems to have begun pricing in the dim outlook, with NIKL trading at a blended forward P\/E of 9.4x, slightly lower than the regional comparable average of 10.0x and its historical average of 9.7x.<\/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>